(Bloomberg) — ASML Holding NV fell as the prospect of tighter U.S. restrictions on its business in China offset the Dutch company’s order growth last quarter.
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The Biden administration is considering using the toughest trade restrictions available if companies including ASML continue to give China access to advanced semiconductor technology, Bloomberg News reported Wednesday before the company released second-quarter results.
The US is targeting ASML, which has a monopoly on the machinery that makes the most advanced semiconductors, as it ramps up pressure to halt China’s advance in the semiconductor industry. Shares fell even as the company reported bookings rose 54% in the second quarter from the previous three months to 5.57 billion euros ($6.1 billion), beating estimates.
“However, the geopolitical angle is likely to be more of a focus today than the results, with Bloomberg reporting that the US is pushing for additional restrictions on ASML,” Andrew Gardiner, an analyst at Citi, said in a note. “Pressure is mounting to restrict service activity to the installed base.”
ASML shares fell as much as 7.7% to 903 euros in Amsterdam, the biggest drop since October 2022.
ASML expects sales in the current quarter to be between €6.7 billion and €7.3 billion, below the €7.5 billion estimate. The company confirmed its previous guidance for flat sales this year before returning to strong growth in 2025.
Previous U.S.-led chip measures targeting ASML’s exports to China have not affected demand from the Asian country. China accounted for nearly half of ASML’s revenue in the second quarter, and sales in the country rose 21% from the previous period. Beijing has been buying older, unfettered chips to make more mature types of semiconductors.
ASML is increasingly driven by demand for high-power chips needed for artificial intelligence applications.
“We are currently seeing strong developments in AI, which is driving most of the industry’s recovery and growth, ahead of other market segments,” Christophe Fouquet, the company’s CEO, said in the statement.
Strong results from some of ASML’s biggest customers have helped support demand for the company’s equipment. Last week, Taiwan Semiconductor Manufacturing Co. said second-quarter sales grew at their fastest pace since 2022, helped by the AI boom that is fueling investment in data centers around the world. Sales to Taiwan rose by €290 million in the quarter as demand for advanced equipment also surged.
The fourth quarter was the first for ASML under Fouquet, who took over when Peter Wennink retired in April. He has been trying to balance the U.S. push to tighten export controls on China with the need to keep selling equipment in the company’s biggest market.
US pressure to slow Beijing’s advance in semiconductor manufacturing led the Netherlands to ban exports to China of ASML’s second-most advanced class of machinery, DUV submersible lithography machines, at the start of the year.
However, ASML continues to service equipment purchased before the restrictions were imposed. The Biden administration has told allies it is considering invoking the foreign direct product rule, which allows the U.S. to impose controls on foreign-made products that use even the smallest amount of American technology, if such practices continue, according to a Bloomberg report.
The company said up to 15% of its China sales this year would be affected by export control rules imposed in January. ASML has never been allowed to sell its latest EUV technology to China.
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