Semiconductor equipment stocks slump after US House committee slams their sales to China and recommends more export curbs

Semiconductor equipment stocks came under pressure Wednesday morning after a House committee “uncovered alarming new information revealing that companies in America and allied nations — including ASML in the Netherlands, Tokyo Electron (TEL) in Japan, and Applied Materials, KLA Corp, and Lam Research in the United States — fueled semiconductor manufacturing in China and made sizable returns selling equipment to Chinese state-owned and military-linked companies,” according to a Tuesday night press release.

The report, however, does not include an outright accusation that any of these companies have broken the law.

ASML alleviates a key choke point in the manufacturing process for advanced semiconductors by selling systems that etch tiny designs onto tiny wafers.

Applied Materials, meanwhile, came under pressure last week after indicating that enhanced export restrictions from the Commerce Department would result in a $600 million hit to revenues in its fiscal 2026. Both this stock as well as Lam Research have been able to reverse early losses to trade higher amid a broad rebound for much of the AI trade.

At the time, analysts noted that Applied Materials’ peers (KLA and Lam Research) would likely also be adversely impacted by these measures. China is the largest market for all three of these companies in the wafer fab equipment industry.

In its report, the House Select Committee on the Chinese Communist Party recommends that Dutch and Japanese export controls be harmonized with US restrictions, expanding country-wide export curbs, widening the list of restricted entities, not allowing allied manufacturers to sell to Chinese military entities, and more.