Shares of chip equipment manufacturer ASML Holding NV declined on Tuesday, the first trading day after US legislators introduced a bill last week that could further restrict the company's sales to China. Analysts indicated that if the bill is passed in the US and enforced by the Dutch government, ASML could face new export controls for the first time since September 2024, hindering its ability to sell and service deep ultraviolet (DUV) immersion lithography systems for Chinese customers.
ASML is a leading supplier of such core equipment used to create chip circuits, though it faces competition from Japan's Nikon and China's Shanghai Micro Electronics Equipment (SMEE). Analysts at Citi expressed a negative outlook on the situation in a report.
ASML's stock fell as much as 4.7% before paring some losses. By 11:00 GMT, shares on the Amsterdam exchange were down 4.1% to €1,114. ASML declined to comment, while the Dutch government stated that it is not its role to comment on proposals from the US legislature.
Analysts are divided on the potential financial impact. ASML has previously projected that sales in China would account for 20% of its total revenue by 2026, though sales of older-generation equipment would remain unaffected.
Michael Roeg, an analyst at Degroof Petercam, estimated that the new rules could lead to a single-digit percentage decline in ASML's sales. Sandeep Deshpande, an analyst at JPMorgan, suggested that ASML's earnings per share (EPS) could drop by up to 10%. He also noted that while sales to other regions would increase significantly as non-Chinese chipmakers expand capacity to compensate, this would not fully offset the loss of revenue from China. In his report, he emphasized that the biggest impact would be felt across global markets.
He added, "If these restrictions are implemented, already tight chip production capacity in multiple markets will worsen further."
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