Lam Research Drops as U.S. Could Move to Limit China Access to U.S. Chips

The Commerce Department is currently drafting changes that would limit China's access to U.S. chip technology.
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Lam Research  (LRCX) - Get Report was falling after The Wall Street Journal reported the Trump administration was considering putting restrictions on semiconductor equipment sales to China amid cybersecurity concerns.

The Commerce Department is considering rule changes that would let any agency ask for licenses from any companies that wanted to use U.S. equipment to make microchips for China's Huawei Technologies.

The Journal reported there are some administration officials who don't support the changes and the proposed changes have not been reviewed by President Donald Trump.

In 2019, the U.S. placed restrictions of sales of microchips to Huawei, one of the world’s largest mobile phone handset makers, but some companies have continued to supply the company thanks to a rule that allows for license-free sales if products are less than 25% U.S. made. The Commerce department has proposed reducing that threshold to 10%.

Last week, the U.S. hit Huawei and two U.S. subsidiaries with a racketeering indictment and a charge of conspiracy to steal trade secrets “stemming from the China-based company’s alleged long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts.”

Named in the indictment are Huawei and the company's chief financial officer, Wanzhou Meng, who is also Huawei founder Ren Zhengfei's daughter. Also charged are four official and unofficial subsidiaries: Huawei Device Co. Ltd. , Huawei Device USA Inc., Futurewei Technologies Inc. and Skycom Tech Co. Ltd.

Lam Research shares were falling nearly 4% on Tuesday to $326.16 while fellow chipmaker KLA Corp.  (KLAC) - Get Report declined 41.8% to $168.92.