Shares of ASML and Applied Materials fell after a US government report suggested their products were involved in China's semiconductor industry.
Shares of major semiconductor equipment companies like ASML and Applied Materials declined following a U.S. House committee report. The report alleges these companies inadvertently support China’s military through equipment sales and profit generation from state-owned and military-linked firms. While no laws were broken, the potential for new U.S. export restrictions triggered the market downturn. The drop marked the largest intraday decline since July, although losses have since been partially recovered. ASML, a critical supplier of advanced lithography machines, faces restrictions on sales to China but still derives a significant portion of its revenue from the region. Applied Materials is projected to experience substantial revenue losses due to expanding U.S. export controls on Chinese clients. Despite these challenges, China remains a vital market for both companies, particularly for less advanced equipment. The semiconductor industry is at the center of an intensifying technological rivalry between the United States and China. The U.S. government has implemented tighter export controls, recently rescinding authorizations for key customers to supply Chinese factories. Simultaneously, China is aggressively pursuing advancements in chip technology and AI development to lessen reliance on foreign suppliers, even building a shadow manufacturing network.
