(Bloomberg) — ASML Holding NV fell as the prospect of tighter U.S. restrictions on its business in China offset growth in the Dutch company’s order intake 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 published its second-quarter results.
The US is targeting ASML, which has a monopoly on manufacturing the machines that produce the most advanced semiconductors, as pressure mounts to halt Chinese advances in the semiconductor industry. Shares fell even as the company reported that bookings rose 54% in the second quarter from the previous three months to 5.57 billion euros ($6.1 billion), beating estimates.
“The geopolitical angle, however, will likely be more in focus today than the results, with Bloomberg reporting that the US is pushing for additional restrictions on ASML,” Citi analyst Andrew Gardiner said in a note. “Pressure is mounting to restrict service activity across the installed base.”
ASML shares plunged 11% in Amsterdam on Wednesday to €870.90 following the Bloomberg report, wiping €42.7 billion ($46.7 billion) off market value. This was the biggest drop since March 2020.
ASML forecasts sales in the current quarter of between €6.7 billion and €7.3 billion, missing estimates of €7.5 billion. The company confirmed previous guidance of flat sales this year before returning to strong growth in 2025.
Previous US-led chip measures targeting ASML exports to China have not hurt demand from the Asian country. China accounted for almost half of ASML’s revenue in the second quarter and sales in the country increased 21% compared to the previous period. Beijing has been purchasing older kits without restrictions to manufacture more mature types of semiconductors.
ASML is increasingly driven by demand for high-power chips needed for AI applications.
“We currently see strong developments in AI, driving most of the industry’s recovery and growth, ahead of other market segments,” CEO Christophe Fouquet said in the statement.
Impressive results from some of ASML’s largest customers have helped sustain demand for the company’s equipment. Last week, Taiwan Semiconductor Manufacturing Co. said second-quarter sales grew at the fastest pace since 2022, driven by the AI boom that is fueling investment in data centers around the world. Sales to Taiwan increased by €290 million in the quarter as demand for advanced equipment also increased.
Last quarter was ASML’s first under Fouquet, who took over when Peter Wennink retired in April. He has tried to balance U.S. pressure to tighten export controls to China with the need to continue selling equipment in the company’s biggest market.
US pressure to slow Beijing’s advances in semiconductor manufacturing led the Netherlands to ban exports to China of ASML’s second most advanced category of machines, immersion DUV lithography machines, at the beginning of the year.
However, ASML continues to provide maintenance services for machines that were purchased before the restrictions came into force. The Biden administration has told allies it is considering using the foreign direct product rule, which allows the U.S. to impose controls on foreign-made products that use even the tiniest amount of American technology, if such practices continue, according to the report from Bloomberg.
The company said up to 15% of sales in China this year will be affected by export control rules imposed in January. ASML was never allowed to sell its most advanced extreme ultraviolet technology to China.
(Updates with shares)
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