Chips stocks dropped this week after it was reported that US President Joe Biden was considering further tightening restrictions on exports of semiconductor equipment to China.

The decline followed a report from Bloomberg that the Biden administration will likely impose even stricter rules on chip equipment companies like ASML and Tokyo Electron.

Last month Bloomberg separately reported that President Biden was weighing up further restrictions on China’s access to AI chip technology, targeting gate-all-around (GAA) transistor technology.

ASML is the sole global supplier of extreme ultraviolet lithography (EUV) photolithography machines that are needed to make the most advanced chips. In Europe, the company saw its stock price drop by 11 percent on July 17.

The company has been at the center of the US government’s ongoing trade war with China, with the Dutch government increasingly succumbing to pressure from the Biden administration to block exports of ASML products to China.

Earlier this month, ASML’s former CEO Peter Wennink said that the ongoing semiconductor trade war between the US and China is ideologically driven, rather than based on facts.

This week, ASML reported that in the quarter ending June 30, business with Chinese customers accounted for 49 percent of its total sales, generating $2.5 billion in revenue during the three-month period.

However, when compared to Q2 2023, the company reported total revenue and revenue derived from equipment sales were down by 10 percent and 14 percent, respectively.

The company’s CEO Christophe Fouquet said that although there was a lot of uncertainty around the chip industry at present, he believes AI will help to drive its recovery over the next year.

Elsewhere this week, comments from former President Donald Trump regarding the Taiwanese chip market and his attitude towards protecting the country from China also caused chip stocks to wobble, with Nvidia, AMD, and TSMC falling by 6.6 percent, 10.2 percent, and eight percent in the US, respectively.

In an interview with Bloomberg Businessweek, Trump said Taiwan should pay the US to protect it from China and accused the country of taking “all [its] chip business.”

The FT reported that in the aftermath of the interview, $496bn was wiped off the market value of stocks in the Philadelphia Semiconductor index, which includes Nvidia, TSMC, and Intel.