ASML faces a geopolitical squeeze as the Dutch lithography giant navigates U.S. pressure to tighten export controls on chipmaking equipment to China, which will contribute about 20% of its 2026 revenue — down from roughly 33% in 2025 but still representing billions of euros in sales.
ASML Holding, the sole manufacturer of the extreme ultraviolet lithography machines essential for advanced chip production, is walking an increasingly narrow line between its Chinese revenue stream and U.S. political pressure to tighten export controls. Chief Financial Officer Roger Dassen said China will contribute about 20% of the company's 2026 net sales, a sizable drop from roughly 33% in 2025 but still representing billions of euros in revenue that proposed U.S. legislation could put at risk.
"The proposed MATCH Act would extend restrictions beyond EUV systems to include DUV immersion tools and servicing of machines already installed in Chinese fabs," Dassen said during ASML's second-quarter earnings call Wednesday. "We are monitoring the legislative process closely."
The Multilateral Alignment of Technology Controls on Hardware Act, introduced in Congress on April 2 and passed out of the House Foreign Affairs Committee on April 22, would ban ASML from selling its remaining accessible products to Chinese chipmakers such as SMIC and Hua Hong. More significantly, the bill would prohibit ASML from servicing machines already deployed in Chinese factories — a provision that analysts say would gradually degrade the performance and yield of China's existing installed base without requiring any new export ban. The bill includes a 150-day window for allied governments, principally the Netherlands and Japan, to implement equivalent controls before the U.S. would act unilaterally.
The geopolitical tension comes as ASML delivered its strongest quarter on record. The company reported second-quarter net sales of 9.33 billion euros ($10.9 billion), exceeding the 8.80 billion euro consensus, with net income of 2.92 billion euros topping the 2.62 billion euro estimate. ASML raised its full-year 2026 revenue forecast for the second time this year to between 43 billion and 45 billion euros, up from its initial January guidance of 34 billion to 39 billion euros, and announced plans to expand EUV and DUV production capacity by 30% annually over the next two years.
China's contribution to ASML's top line has been a flashpoint since the U.S. first restricted exports of EUV systems to China in 2019 and extended controls to advanced DUV tools in October 2022. Chinese chipmakers responded by stockpiling less-advanced DUV machines, pushing China's share of ASML's revenue to about 33% in 2025 from roughly 15% in 2022. The projected decline to 20% in 2026 reflects both the natural digestion of those stockpiled orders and the anticipation of tighter restrictions.
In absolute terms, however, China's revenue contribution continues to grow alongside ASML's overall sales expansion. The company's 2026 midpoint guidance of 44 billion euros implies Chinese revenue of roughly 8.8 billion euros at the 20% share — higher than the approximately 7.3 billion euros China contributed in 2025, when ASML's total revenue was about 22 billion euros. The percentage decline masks continued absolute growth, underscoring why ASML's exposure to Chinese demand remains a material risk factor.
The last time the U.S. escalated semiconductor export controls — the October 2022 rules that barred ASML from shipping its NXT:2000i and more advanced DUV systems to China — ASML shares fell 12% over the following month while the Philadelphia Semiconductor Index dropped 8%. The proposed MATCH Act goes further by targeting the servicing revenue stream, which carries higher margins than new system sales.
For ASML, the risk is twofold. A servicing ban would begin a countdown on the usable life of China's existing DUV installed base, which chipmakers rely on for mature-node production serving automotive, industrial and consumer electronics markets. Those machines require continuous calibration, software updates and field engineering support to maintain process stability. Without ASML's service infrastructure, Chinese fabs would face declining yields and eventual equipment downtime.
For the broader semiconductor supply chain, tighter controls on ASML's China sales would accelerate Beijing's push for self-sufficiency. Reuters reported in December 2025 that China had secretly completed a prototype EUV machine in Shenzhen, with working chip production expected between 2028 and 2030. ASML's 30% annual capacity ramp means its installed base will be substantially larger by the time any Chinese alternative reaches commercial production, reinforcing the company's competitive moat through capital commitments rather than export controls alone.
ASML shares rose 3.9% to 1,617 euros in Amsterdam trading Wednesday after gaining as much as 7.9% earlier in the session, as investors focused on the earnings beat and raised guidance rather than the geopolitical overhang. The stock has gained about 66% year to date, reflecting market conviction that ASML occupies a structurally irreplaceable position in global technology supply chains — even as the U.S.-China AI feud tightens the constraints around it.
This article is for informational purposes only and does not constitute investment advice.
