Chip supplier stocks jump as the US weighs up fresh China sanctions

• The US is planning new curbs on chip exports to slow China's AI development, per multiple reports.
• It could blacklist 200 Chinese semiconductor equipment manufacturers, Wired reported.
• Targeting Chinese chip equipment makers could benefit European firms like ASML.

The Biden administration is reportedly considering fresh sanctions against Chinese semiconductor equipment manufacturers, pushing up stocks of semiconductor suppliers in Europe and Japan.

Bloomberg reported that while the newly proposed sanctions still target Chinese chip fabrication plants, they put greater emphasis on targeting domestic firms supplying manufacturing equipment to chipmakers. The suggested curbs would add an extra 100 Chinese chip equipment makers to the entity list, the outlet reported.

That pushed the share price of ASML — the Dutch firm supplying crucial specialized equipment to chip manufacturers, including China's SMIC — up by more than 4.27% Thursday.

Tokyo Electron, which also sells equipment for manufacturing chips, saw its share price climb by more than 6% on Thursday.

The restrictions, expected as soon as next week, could also add chip makers to the sanctions list, including key suppliers to Chinese smartphone maker Huawei, Bloomberg and Wired reported, citing people familiar with the matter. The new proposals would affect fewer Huawei suppliers, the reports added.

As part of the sweeping sanctions, the US could add 200 Chinese chip firms to its trade blacklist, Wired reported. The controls could also include restrictions around trading memory chips, which are crucial for the development of AI models.

'Malicious attempts to block and suppress China'

Chinese stocks were down on Thursday. Hang Seng's stock slid by more than 1%, and the CSI and the Shanghai Composite are also down by 0.57% and 0.10%, respectively.

"This decline is occurring as the Biden administration is considering imposing additional restrictions on the sale of crucial semiconductors to China, possibly as early as next week," said Jim Reid, Deutsche Bank's global head of economics and thematic research, in a research note.

The Biden administration has worked to limit China's progress in the semiconductor industry in recent years by rolling out export controls aimed at cutting off its access to buying advanced AI chips and chipmaking equipment.

American chip equipment makers and allies like Japan and the Netherlands reportedly pushed back against earlier proposals.

Under the new rules, companies and even foreign firms that used American parts or software in designing and manufacturing AI chips will be required to obtain licenses to export to China.

Mao Ning, a spokesperson for China's foreign ministry, said at a press conference this week, "China is firmly opposed to the US overstretching the concept of national security, abusing export control measures and making malicious attempts to block and suppress China."

The US Department of Commerce didn't immediately respond to a request for comment from Business Insider, made outside normal working hours.