In a recent development, ASML has revealed the potential impact of U.S. export restrictions on its sales to China. The Dutch chip equipment manufacturer indicated in its earnings report, released a day early due to a “technical error,” that net sales for 2025 are expected to range between 30 billion euros and 35 billion euros ($32.7 billion to $38.1 billion), placing it on the lower end of previously issued guidance.
ASML, a vital entity in the global chip supply chain, supplies extreme ultraviolet lithography machines to major chipmakers such as Nvidia and Taiwan Semiconductor Manufacturing. The company’s third-quarter net sales reached 7.5 billion euros, surpassing expectations. However, net bookings fell short at 2.6 billion euros ($2.83 billion), compared to a consensus estimate of 5.6 billion euros from LSEG.
Following this announcement, ASML’s shares fell by as much as 16% on Tuesday, resulting in over $50 billion in market capitalization loss in just one day, based on CNBC’s calculations using LSEG data. Analysts cited weakness among certain customers, including Intel and Samsung, as reasons for the booking disappointments. Additionally, geopolitical tensions were highlighted as influencing ASML’s 2025 outlook.
ASML’s Chief Financial Officer, Roger Dassen, told analysts in a call that sales to China are expected to decline next year. The U.S. export restrictions were noted as a contributing factor to this anticipated reduction. UBS analysts mentioned that the updated guidance points to a 25% to 30% decrease in 2025 China sales, largely due to delays in developing new logic fabrication facilities by Intel and Samsung.
ASML’s Chinese customers have been stockpiling its less advanced machines in response to U.S. export restrictions. The company has not sold its most advanced extreme ultraviolet lithography (EUV) machines to Chinese customers due to existing restrictions but has instead supplied its second-tier deep ultraviolet lithography (DUV) machines, which are crucial for chip production.
Last year, sales from China comprised 29% of ASML’s revenue, but the company expects this to decrease to around 20% by 2025. This prediction comes as Chinese customers increase their purchases in reaction to anticipated restrictions. ASML reported that China accounted for about 49% of its second-quarter sales in 2024.
In September, the Netherlands expanded export controls on advanced chip tools, effectively enabling the government to manage the exportation of ASML’s machines. This move could potentially impair ASML’s ability to maintain the DUV machines sold to China. Chris Miller, an assistant professor at the Fletcher School of Law and Diplomacy, commented on the situation, stating that export restrictions have likely driven China to accelerate its purchase of older DUV tools from ASML.
Analysts from Bank of America have noted a substantial decline in ASML’s China revenues, predicting a 48% decrease year-over-year by 2025. Abishur Prakash, founder of The Geopolitical Business, stated that ASML’s dependency on China is significant and that the firm is likely to see further declines in demand as it faces substantial export control restrictions.
