“This signals a gradual shift in the industry landscape,” said one market analyst as ASML saw its stock drop nearly 5% following news about China’s progress in deep-ultraviolet (DUV) lithography technology. The Dutch semiconductor equipment leader faces increasing scrutiny after reports that a Chinese state-backed company may soon start producing immersion DUV machines, a segment where ASML has been virtually unrivaled.
Despite China’s technology still lagging behind ASML in reliability and scale, investors worry that these advances could chip away at the company’s dominance over time. China aims to manufacture around five immersion DUV units in 2026 and 20 in 2027, compared to ASML’s expected production of 130 and 169 machines in those years, respectively. The gap remains wide but the direction is clear: Beijing is intent on reducing its reliance on foreign semiconductor equipment.
ASML’s exposure to the Chinese market adds another layer to investors’ concerns. China is forecasted to account for about 20% of ASML’s revenue in 2026, roughly $10 billion according to current projections. The market is starting to price in the possibility that local competitors could erode ASML’s sales and pricing power, especially as geopolitical tensions and export controls persist. This unease has spilled over to other players in the semiconductor equipment sector, though ASML faces the most direct impact given its advanced lithography focus.
ASML’s strong quarterly results failed to calm nerves, with traders reassessing growth prospects amid these emerging challenges. While immediate disruption seems unlikely, the evolving scenario underlines the increasing pressure on global chip equipment leaders from China’s ambitious push for self-sufficiency in semiconductor manufacturing.
This material is for informational purposes only and does not constitute financial advice.
