ASML Tanks Over 6% on Fears of Trump's Push on Export Controls Targeting China

TMTPOST -- Netherlands-listed shares of ASML Holding NV tanked more than 6.3% from Thursday to Friday, underperforming the Europe stock market as the benchmark STOXX 600 index edged up nearly 0.4% over the past two days. Shares tallied back-to-back losses as U.S. President Donald Trump stirred mounting fears of further curbs on the leading lithography machine manufacturer’s exports to China, its largest market.

Credit：ASML

The Trump administration is expected to keep pressing to restrict ASML’s exports to China, Dutch Prime Minister Dick Schoof said in an interview with Bloomberg in Davos on Wednesday. “The Biden administration pushed very hard and I expect the Trump administration pushing the same way,” said Schoof, noting that the U.S. and the Netherlands “are aligned” on the China policy.

Still, Schoof expressed caution on decision making since ASML is crucial for the Dutch economy and the government doesn’t want to change that position. “I think it’s important that we decide on our own on what we will do” with the export controls policy, the prime minister said.

When asked whether he expected retaliatory measures from China against the Netherlands' export controls, Schoof said that retaliation is not on the agenda. China and Netherlands are “good friends,” and the two countries may discuss export control issues, and listen to each other. Netherlands has good trade relations with China, but differences may arise even between good friends, he added.

China's Vice Premier Ding Xuexiang told Dutch King Willem-Alexander in The Hague that Beijing stands ready to increase mutual trust and that it would work together to maintain stability and smoothness of the global supply chain, according to China’s foreign ministry on Thursday.

China and the Netherlands have their own advantages in different parts of the global production and supply chain and there is great potential for strengthening cooperation, which is in the interests of both countries and conducive to world peace, stability, development and progress, Ding said.

Founded in 1984, Netherlands-based ASML provides comprehensive lithography solutions encompassing hardware, software, and services, assisting chip manufacturers in large-scale image etching on silicon wafers. Meanwhile, ASML is currently the only manufacturer of Extreme Ultraviolet (EUV) lithography systems in the world. As a key for the future lithography technology and advanced process, EUV lithography is the most expensive step in making the advanced microchips that power data centers, cars and iPhones.

ASML has been restricted from selling its high-end machines in China since 2019 due to U.S.-led export controls. The company confirmed at the beginning of this year that a license for the shipment of NXT:2050i and NXT: 2100i has been revoked by the Dutch government, but added the revocation just affected a small number of customers in China. “We do not expect the current revocation of our export license or the latest U.S. export control restrictions to have a material impact on our financial outlook for 2023,” ASML said in the statement in January, 2024.

Latest financial reports showed China remains ASML’s largest market with a 47% of system sales in the September quarter, down from 49% in the quarter ended June. ASML is bracing further decline in sales contribution of China in 2025. ASML Chief Financial Officer (CFO) Roger Dassen said in October he expects the company’s China business to show a “more normalized percentage in our order book and also in our business.” “We do see China trending towards more historically normal percentages in our business,” Dassen said.“So we expect China to come in at around 20% of our total revenue for next year. Which would also be in line with its representation in our backlog.”

The Dutch government announced last September further expansion of the scope of export controls on lithography machines, which builds on the semiconductor export control measures implemented in 2023. Exports of ASML's 1970i and 1980i Deep Ultraviolet (DUV) immersion lithography tools are subject to the latest curb. ASML said in a statement that it did not expect the change in oversight to impact earnings for the year 2024 or in the future.

Earlier this month, the Dutch government said it will expand export control measure for advanced semiconductor manufacturing equipment from April 1, bringing licensing requirements of ASML ’s machines under its purview.

“I’ve made this decision for reasons of security. We see that technological advances have given rise to increased security risks associated with the export of this specific manufacturing equipment, especially in the current geopolitical context,” Reinette Klever, minister of foreign trade and development for the Netherlands, said in a statement.