Shares of major global semiconductor equipment companies, including ASML (ASML), Lam Research (LRCX), KLA Corp. (KLAC), and Micron (MU), rose in pre-market trading on Thursday. The surge followed a Bloomberg report about potential U.S. sanctions on China’s chip industry. However, the proposed measures are expected to be less stringent than earlier ones, providing some relief to major chip manufacturers.
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According to Bloomberg, the U.S. is considering new restrictions on semiconductor equipment and AI memory chip sales to China. The report also noted that fewer suppliers to Huawei, the Chinese technology giant, may be added to the export blacklist, known as the Entity List. Notably, ChangXin Memory Technologies, a key Chinese memory chip company, is excluded from the proposed sanctions.
Easing of U.S. Chip Sanctions Could Help ASML
ASML, a pivotal player in the semiconductor supply chain, produces advanced chip-making machines. The company has been entangled in the geopolitical tensions between the U.S. and China, as its machines have faced stringent export controls imposed by the U.S. and Dutch governments, effectively halting shipments to China.
Jefferies analysts previously estimated that ASML’s revenue from China would drop by 30% in 2025. However, if ASML is excluded from these sanctions, the decline may be less severe.
Bloomberg also indicated that the U.S.’s proposed sanctions would primarily target Chinese companies producing semiconductor manufacturing equipment, rather than those manufacturing chips. This distinction could benefit foreign equipment manufacturers like ASML, as their sales to chipmakers might remain unaffected.
Is ASML a Buy or Sell?
Analysts remain bullish about ASML stock, with a Strong Buy consensus rating based on four Buys and one Hold. Year-to-date, ASML has declined by more than 10%, and the average ASML price target of $917.67 implies an upside potential of 36.8% from current levels.
