Shares of global semiconductor equipment firms surged on November 28, 2024, following reports that U.S. officials are considering easing sales restrictions to China.

Bloomberg reported that the U.S. government is contemplating new restrictions on semiconductor equipment and AI memory chips to China, but these measures may be less severe than previously proposed.

The potential easing of restrictions includes the possibility that fewer Chinese chip suppliers will be added to the U.S. export blacklist, particularly with ChangXin Memory Technologies likely to be exempt.

The impending sanctions may primarily target Chinese companies involved in semiconductor manufacturing equipment rather than those producing the chips themselves, which could benefit ASML and other international equipment manufacturers.

ASML, a key player in the global semiconductor supply chain, saw its shares rise approximately 3.6% in early European trading, reflecting optimism about the potential easing of trade restrictions.

Analysts believe that the revised sanctions could lead to a smaller decline in sales for Western chipmakers in China than previously anticipated, which is viewed positively.

Taiwan Semiconductor is facing challenges due to these geopolitical tensions and China's efforts to boost its local chip production capabilities.

A Jefferies analysis suggested that ASML might experience a less severe revenue decline in China than expected, particularly if ChangXin is excluded from the sanctions.

Despite facing challenges, ASML has seen its stock drop 7% this year, currently trading at $670.48 per share, as it anticipates a significant decrease in revenue from China.

The discussions surrounding these trade restrictions involve U.S. officials, allies from Japan and the Netherlands, and American chip equipment manufacturers, who have been lobbying against stricter measures.

Tensions in U.S.-China trade relations are expected to escalate with the upcoming inauguration of Donald Trump in January 2025, who has threatened to impose extensive trade tariffs on China.

The gains in the tech sector contributed to a broader rise in Chinese markets, with key indices increasing between 1% and 2%.