ASML Holding (ASML) gained in pre-market trading after a Bloomberg report indicated that the U.S. plans to exempt Dutch and Japanese semiconductor equipment makers from its latest restrictions on China. However, the report clarified that these plans are still fluid and could change.
ASML, based in Veldhoven, Netherlands, makes crucial machines for producing computer chips. These machines are essential for advanced technology. The specialized nature of ASML’s equipment means it’s not included in the new U.S. restrictions, which usually target more general chip-making equipment.
Biden Plans New Trade Restrictions on China
The Biden administration is implementing a broad trade restriction, known as the Foreign Direct Product rule, to limit China’s access to advanced semiconductor technology. However, companies like ASML Holding NV and Tokyo Electron Ltd. are expected to be exempt from this new restriction.
Even with these exemptions, the Biden administration faces increasing pressure to curb China’s technological advancements, and these companies might still encounter some restrictions.
According to the report, Amir Anvarzadeh of Asymmetric Advisors noted that the U.S. might exempt semiconductor production equipment (SPE) manufactured in the Netherlands, Japan, and Korea. These countries are more likely to comply with stricter export policies “without the U.S. needing to resort to invoking the Foreign Direct Product rule.”
Tech Restrictions on China
The U.S. has long aimed to restrict China’s tech growth, with measures such as export controls on AI chips and chip-making equipment. Meanwhile, countries like Japan and the Netherlands have resisted adding further restrictions on chip-making equipment, fearing damage to their relations with China and potential harm to their own companies.
Is ASML Stock a Buy?
Analysts remained bullish about ASML stock, with a Strong Buy consensus rating based on a unanimous five Buys. Over the past year, ASML has increased by more than 20%, and the average ASML price target of $1,172.25 implies an upside potential of 36.3% from current levels.
