ASML, Tokyo Electron Gain on Report US Allies Exempt From Curbs

(Bloomberg) — Tokyo Electron Ltd. and ASML Holding NV led a worldwide rally in semiconductor stocks after Reuters reported the Biden administration planned to exempt chip-equipment makers in Japan, the Netherlands and South Korea from upcoming export restrictions.

Most Read from Bloomberg

ASML shares jumped 11%, the biggest intraday gain since March 2020, on the news. In Japan, Tokyo Electron’s stock rose 7.4%, the most since February. Disco Corp., which makes tools that dice silicon, gained 5.8%, and Screen Holdings Co., which makes machines that clean wafers and chip packaging equipment, climbed 9.2%.

The US plans to invoke the Foreign Direct Product rule to prevent export of products that use any American technology from around the world to about half a dozen Chinese semiconductor manufacturing facilities, Reuters said. But it’s excluding allies such as Japan and the Netherlands, home to the the world’s leader in lithography ASML.

Bloomberg News earlier reported on discussions regarding the Foreign Direct Product rule between the US and its allies, triggering a rout in chip gear shares, from ASML to Tokyo Electron. ASML suppliers Lasertec Corp. and Screen had also declined.

US policymakers have focused on exports of semiconductor production equipment as a means to rein in China’s technological capabilities in areas such as artificial intelligence and quantum computing.

Exempting companies such as ASML and Tokyo Electron from such a move would mean Chinese manufacturers would be able to maneuver around stricter restrictions that might apply to US makers such as Applied Materials Inc., Lam Research Corp. and KLA Corp., however.

The US had floated the possibility of using FDPR to officials in Tokyo and the Hague in an effort to push them to expand their own export curbs on chip production equipment. US officials presented the measure as a likely outcome if the countries don’t expand their own China curbs to limit companies’ ability to service and repair restricted equipment already in China, people familiar with the matter had said.

(Updates with ASML share reaction and background)