The United States is set to temporarily exempt semiconductor equipment manufacturers ASML and Tokyo Electron from new export restrictions targeting China. The Biden administration is preparing to implement the Foreign Direct Product Rule (FDPR) to prevent specific firms in China and other countries of concern from accessing advanced semiconductor technology. However, ASML, Tokyo Electron, and other chip companies in the Netherlands and Japan are expected to be exempt from these restrictions, according to sources familiar with the situation. This plan remains subject to change.
The US has been attempting to curb China’s technological rise by imposing export controls on advanced chips and chipmaking equipment. The new measures, part of a broader initiative, come amid ongoing negotiations between Washington, Tokyo, and The Hague on whether Dutch and Japanese firms can continue servicing restricted equipment in China—a practice that US companies are currently prohibited from doing.
The FDPR allows the US to regulate foreign products that incorporate American technology, potentially preventing companies like ASML and Tokyo Electron from servicing their advanced equipment in China. The new rules may also add over 120 Chinese companies to the “entity list,” a designation for groups deemed US national security concerns, including businesses like Huawei Technologies. It remains uncertain which technologies and buyers will be affected by these restrictions.
A spokesperson for the US Commerce Department stated that the department is “continually assessing the evolving threat environment and updating our export controls as necessary to protect US national security and safeguard our technological ecosystem.” The department also emphasized its commitment to working closely with allies who share similar values.
Following the news, ASML’s shares surged by 11%, while Tokyo Electron’s stock rose by 7.4%. Other chip-equipment stocks in Europe and Asia, such as ASM International and Disco, also saw gains. However, Amir Anvarzadeh of Asymmetric Advisors cautioned that the market might be prematurely optimistic, noting that the exemption could be temporary, depending on whether these countries align with US demands for stricter export policies to China.
The Biden administration faces pressure to take further action to slow Beijing’s technological progress. Although ASML and Tokyo Electron may currently be exempt, they could still face future constraints. Japan and the Netherlands, key players in the global chip-making equipment industry alongside the US, have expressed concerns that additional controls could harm their own companies and strain relations with China.
Representatives for ASML and the Dutch foreign trade ministry declined to comment on the reports. The Netherlands stated that it bases its export control policies on national security concerns and maintains confidential communications with various partners. Tokyo Electron did not respond to requests for comment.
US policymakers have targeted semiconductor production equipment exports to limit China’s capabilities in areas like artificial intelligence and quantum computing. While American companies have faced significant restrictions, they have advocated for a more multilateral approach. The FDPR extends US influence over foreign companies using American inputs, potentially affecting Japanese and Dutch firms in the future.
The US plans to exempt certain countries, including Japan, the Netherlands, and South Korea, from the FDPR measures, while others like Israel, Taiwan, Singapore, and Malaysia may not receive the same exemptions.
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