ASML shares fall 6.67% on China export-control concerns

Semiconductor selloff

The selling was not confined to ASML. Micron Technology fell 12.05% in the same session, Nvidia 6.64% and AMD 13.15%, according to TradingKey's market-movers report. The report cited heightened geopolitical friction, cautious capital spending signals from chipmakers and a rotation out of high-multiple technology names.

Record quarter and China sales

ASML's 14 October results showed record third-quarter net sales of €11.7 billion, inside its €11 billion to €12 billion guidance, and gross margin of 57.5%, above its 55-57% range. Net income rose to about €5 billion from €2.13 billion a year earlier, and the company raised the lower end of its full-year 2026 revenue forecast to €44 billion from €43 billion while keeping the upper end at €45 billion, startupfortune reported.

Sales to China rose 109% from the previous three months, taking China's share of machine sales to 23% from 14% in the second quarter, according to the results. ASML expects China to be about 20% of total sales this year.

Dutch license rules and the MATCH Act

TradingKey said investors are factoring in tighter service contracts, spare parts supply and tool delivery restrictions, which could erode high-margin recurring revenue from China. The Dutch government clarified that supplying spare parts and software updates for chipmaking equipment to China requires a license, and it added two more tools to its export restriction list following a coordinated policy with the United States.

The US Multilateral Alignment of Technology Controls on Hardware Act, or MATCH Act, would give the Netherlands 150 days to match American export controls or see Washington extend jurisdiction over Dutch-made tools through the Foreign Direct Product Rule. The bill would name five Chinese chipmakers and target the immersion DUV machines ASML can still legally sell into China, according to startupfortune, which also reported that the Dutch government has publicly objected, saying it wants to keep setting its own export policy, and that the bill has not had a floor vote in either chamber.

The 10 November cutoff was the expiry date of the US-China trade truce reached in Busan in May. Treasury Secretary Scott Bessent announced on 23 September that both sides had extended it to 10 January 2027, startupfortune reported.

China's DUV effort

ASML is the only supplier of EUV systems and competes with Canon and Nikon in DUV, according to 247wallst. Its China exposure sits in DUV: in the third quarter, non-EUV system sales of €4.3 billion exceeded EUV sales of €4.1 billion, and its EUV growth outlook excludes China.

247wallst, citing Reuters, reported that state-owned Shanghai Aishengna Electronic Technology Group had begun producing domestic immersion DUV machines, with first tools headed to chipmakers such as SMIC, and described the step as mass production; startupfortune said the state-backed company began limited production this summer and that the small initial run remains far short of replacing ASML's installed base.

JPMorgan Chase analysts said Chinese DUV still lags ASML by several generations and called the selloff disproportionate, Asia Times reported, according to 247wallst. CEO Christophe Fouquet said the chance of major competition in China is "still pretty low" and that the industry has heard a Chinese rival was coming "for the last 25 years". He also said restricted access creates "a lot more motivation" for Chinese suppliers. Fouquet said on the third-quarter earnings call that demand in China remains strong, with continued fab construction expected to support it in 2027 and beyond, the Global Times reported.