ASML shares fall after proposed U.S. chip export curbs on China
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ASML Shares fell on Tuesday after U.S. lawmakers last week proposed additional measures that would restrict China from additional chip production tools, potentially affecting the Dutch chip giant’s already fragile sales to the country.
ASML shares in the Netherlands were down around 2.6% around 6:11 a.m. ET.
On Thursday, a group of bipartisan lawmakers introduced the Multilateral Alignment of Technology Controls on Hardware (MATCH) Act, designed to alienate China from chip manufacturing tools and target the country’s most critical semiconductor firms.
“While the United States has implemented sweeping export controls to slow China’s semiconductor indigenization, U.S. allies have not fully complied with these measures. This misalignment has left critical gaps that China continues to exploit,” the office of Rep. Michael Baumgartner, R-Wash., who spearheaded the bill, said in a statement released April 2.
ASML could not immediately be reached for comment when contacted by CNBC.
What is the impact on ASML?
The United States has imposed various semiconductor export restrictions on China over the past few years.
Most of these focused on state-of-the-art semiconductor technology. ASML does the following: Extreme ultraviolet (EUV) lithography machines required to produce the most advanced chips on the planet.
ASML did not export any of these machines to China.
The Dutch company also produces a deep ultraviolet (DUV) lithography machine. DUV lithography machines are less advanced and are used to produce other types of semiconductors, such as memory chips that install in everything from laptops to phones.
Some of ASML’s DUV machines are subject to Dutch export licenses.
If passed, the MATCH Act would even ban ASML’s DUV lithography machines, which can be used to make less advanced semiconductors and have so far been available to China’s largest chipmakers.
In January, ASML said it expected China to account for about 20% of total sales this year, up from 33% in 2025. This was before the proposed new US restrictions.
If the restrictions come into force, this could put pressure on the Dutch company’s China sales, which are already in decline.
“While the bill is in its early stages and its outcome is uncertain, it creates a geopolitical overhang. At this stage, it remains unclear whether all DUV vehicles will be potentially concerning or whether existing restrictions on some DUV immersion vehicles will be expanded,” Stephane Houri, head of equity research at ODDO BHF, said in a note on Tuesday. he said.
Houri said that if a broad DUV ban were implemented, it would “create some volatility” in ASML results, “potentially increasing some short-term orders (before restrictions are imposed) but impacting results in the medium term.”
“The share price reaction suggests that proposals from Congress in the US could have a pretty significant impact on ASML,” Ben Barringer, head of technology research at Quilter Cheviot, told CNBC.
“The law will impact older versions of the company’s lithography tools, which represent about 10%-15% of total sales. China is about 50% of that mix, so we’re looking at a pretty big hit of around 5%, but it will likely depreciate over time.”
Both Barringer and Houri noted that the proposals are still in their early stages and must work their way through the American legislative process.
China’s chip industry faces more disruption
Washington’s various restrictions over the past few years have actually helped boost China’s domestic semiconductor industry. Many companies reported record revenue last year, analysts told CNBC. The country has managed to find alternatives to some of the technologies it has been disconnected from, such as high-bandwidth memory. Nvidia rivals.
But China’s largest chipmakers, e.g. Semiconductor Manufacturing International Co. (SMIC) and Hua Hong still rely on ASML’s DUV tools to make less advanced chips.
There is no local alternative to ASML for EUV, and there are few options to replace DUV lithography machines worldwide.
Houri said that if the US proposals were given the green light, “it could disrupt China’s semiconductor manufacturing capabilities, as China is completely dependent on ASML tools today.”
