ASML Holding N.V. (NASDAQ:ASML) shares declined Tuesday after U.S. lawmakers proposed new restrictions that could further limit China’s access to chipmaking equipment, heightening concerns over the company’s exposure to the region.
ASML is the sole supplier of Extreme Ultraviolet (EUV) lithography machines, which are essential for producing advanced semiconductors used in AI, 5G, and high-performance computing.
Its dominance in EUV technology underpins chip development at major foundries, including Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM), Samsung Electronics Co., Ltd. (OTC:SSNLF), and Intel Corp. (NASDAQ:INTC).
Lawmakers Push For Tighter Controls
A bipartisan group introduced the MATCH Act to curb China’s access to semiconductor equipment. The office of Michael Baumgartner said, “While the U.S. has imposed extensive export controls to slow China’s semiconductor indigenization, U.S. allies have not fully matched these measures. This misalignment has left critical gaps that China continues to exploit.”
According to a Reuters report, analysts warn that if the proposed U.S. bill is enacted and enforced by the Netherlands, it could impose new restrictions on ASML for the first time since September 2024, potentially halting both sales and servicing of its Deep Ultraviolet (DUV) immersion lithography tools in China—a development Citi analysts view negatively.
Analysts Flag Uncertainty And Potential Impact
Stephane Houri, head of equity research at ODDO BHF, told CNBC on Tuesday that the proposal adds uncertainty, noting, “While the bill is early-stage and its outcome uncertain, it creates a geopolitical overhang.” He added that a broader ban on DUV tools could “create some volatility” by boosting short-term orders before restrictions take effect, but weighing on results in the midterm.
Ben Barringer, head of technology research at Quilter Cheviot, told CNBC the market reaction reflects the risks, stating, “The share price reaction shows that the proposals coming out of Congress in the U.S. could have a fairly material impact on ASML.” He added that the legislation could affect older lithography tools accounting for about 10%–15% of sales, with China making up roughly half of that, implying a potential 5% hit that may ease over time.
China Reliance Remains A Key Risk
Analysts noted that China still relies on ASML’s DUV machines for less advanced chips, even as the country builds domestic capabilities. Houri said any new restrictions could “disrupt China’s semiconductor manufacturing capabilities, as China completely relies on ASML tools today,” highlighting the broader industry impact if the measures are approved.
ASML Price Action: ASML Holding shares were down 1.24% at $1287.84 at the time of publication on Tuesday, according to Benzinga Pro data.
Image via Shutterstock
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