ASML just gave us a first glimpse into how U.S. chip export curbs will dent its China sales
An ASML icon is being displayed on a circuit board, alongside the flags of the USA and China, in this photo illustration taken in Brussels, Belgium, on January 4, 2024.
Jonathan Raa | Nurphoto | Getty Images
ASML on Tuesday offered the first glimpse into how U.S. restrictions on exports of its advanced chip manufacturing tools to China will impact its sales in the Asian country.
The Netherlands-based chip equipment maker said in its earnings report Tuesday, which was released a day early due to a “technical error,” that it expects net sales for 2025 to come in between 30 billion euros and 35 billion euros ($32.7 billion and $38.1 billion). This is at the lower half of the range ASML had guided previously.
ASML is a critical part of the global chip supply chain. The firm’s extreme ultraviolet lithography machines are used by many of the world’s largest chipmakers — from Nvidia to Taiwan Semiconductor Manufacturing — to produce advanced chips.
While third-quarter net sales at the firm reached 7.5 billion euros — beating expectations — net bookings came in at 2.6 billion euros ($2.83 billion), the company said. That was well below a 5.6 billion euro consensus estimate from LSEG.
ASML shares plunged as much as 16% on Tuesday in response, causing the firm to shed over $50 billion in market capitalization in a single day, according to CNBC calculations using LSEG data.
Beyond the disappointment on bookings — which analysts said was due to weakness in a select number of customers, including Intel and Samsung — AMSL also gave an indication of how geopolitical tensions are putting pressure on its 2025 outlook.
Roger Dassen, ASML’s chief financial officer, said Tuesday that he expects the company’s China business to show a “more normalized percentage in our order book and also in our business.”
UBS analysts said the change in ASML’s 2025 guidance was mainly related to delays with the development of new logic fabrication facilities from Intel and Samsung, adding that the new guidance implies sales to China would fall 25% to 30% in 2025.
How important is China to ASML?
ASML’s China-based customers have been stockpiling the firm’s less advanced machines to get ahead of U.S. export restrictions on the Dutch firm and to continue being able to access its critical technology, which enables them to manufacturer chips for the electronics industry.
ASML has never sold its most advanced extreme ultraviolet lithography, or EUV machines to Chinese customers due to previous restrictions.
Instead, chip firms in the country have opted to order ASML’s deep ultra violet lithography, or DUV machines. DUV machines are ASML’s second-tier lithography systems that are critical to make the circuitry of chips.
Last year ASML sourced 29% of its sales from China. It now expects that contribution from China to drop to around 20% of its total revenue in 2025.
Sales to China grew dramatically in the first three quarters of 2024 as customers scrambled to buy ASML’s DUV machines in bulk head of U.S. and Dutch export restrictions.
In the company’s second-quarter 2024 earnings presentation, ASML said that it sourced as much as 49% of its sales from China.
In September, the Netherlands expanded export restrictions on advanced chip manufacturing equipment by bringing licensing requirements of ASML’s machines under its purview and thereby taking over from the U.S. on controlling what machines ASML is able to export to other countries.
The move meant that the Dutch government would be able to effectively block ASML from maintaining the DUV machines it has sold to China so far.
“China is a very important market for China,” Chris Miller, assistant professor of international history at the Fletcher School of Law and Diplomacy at Tufts University and author of the book “Chip War,” told CNBC in emailed comments. “Most of this revenue is from older-generation chipmaking tools.”
Ironically, restrictions on exports of DUV machines to China “have probably helped ASML on net, because China has accelerated purchases of older generation DUV tools as a result,” Miller added.
Now, ASML is expecting a drop-off in sales to China as a result of U.S. trade restrictions. The firm expects China to return to taking up a smaller share of its overall global sales in 2025, CFO Dassen said in a transcript of a video interview Tuesday.
“We do see China trending towards more historically normal percentages in our business,” Dassen said. “So we expect China to come in at around 20% of our total revenue for next year. Which would also be in line with its representation in our backlog.”
Analysts at Bank of America said the firm faces a “sharp decline in China revenues.” They added that ASML’s forecast of China accounting for around 20% of its revenue in 2025, implies a 48% revenue decline year-over-year — more severe than the 3% they had anticipated.
Abishur Prakash, founder of Toronto-based advisory firm The Geopolitical Business, said that demand from China for ASML’s machines is likely to drop significantly as the firm is “severely restricted by export controls.”
“Like Intel, for whom China is the largest market, ASML is deeply reliant on China,” Prakash told CNBC via email. “For ASML, it is watching what is taking place with China as a potential restriction on business.”
“As the chip world is cut from China, ASML could see demand for its equipment drop — from China and elsewhere,” Prakash added.
Jensen Huang, NVIDIA founder and CEO, has a Q&A session at a press conference during the APEC CEO summit on October 31, 2025 in Gyeongju, South Korea.
Woohae Cho | Getty Images News | Getty Images
Even Nvidia CEO Jensen Huang couldn’t save the tech and artificial intelligence trade this week.
The chip giant’s talismanic leader trumpeted “off the charts” chip sales and dismissed talk of an “AI bubble,” and for a while, the tide lifted all boats.
“There’s been a lot of talk about an AI bubble,” Huang said during an earnings call this week. “From our vantage point, we see something very different.”
The buzz from the blowout report quickly reversed, sending the AI winners deeply into the red — and few beneficiaries were left unscathed.
Every member of the Magnificent 7, except for Alphabet, was tracking for a losing week, with Nvidia, Amazon and Microsoft staring down the biggest losses.
Amazon and Microsoft have led the group’s drop lower, falling about 6% this week. Meanwhile, Alphabet has gained nearly 8%. The search giant is also the only megacap of the group on pace for November gains thanks to a boost from the launch of Gemini 3.
Oracle, which is another major Nvidia customer, slumped about 10%. The chipmaker also supplies major model developers such as OpenAI and Anthropic.
Chip stocks have also declined amid the broader tech market turmoil. Advanced Micro Devices and Micron were on pace for 17% losses. Marvell Technology has slumped about 10%. Quantum computing stocks Rigetti, IonQ and D-Wave have dropped at least 10%
CoreWeave, which buys and rents out Nvidia’s chips in data centers, initially soared on the chipmaker’s earnings report, but swiftly reversed course. The company’s stock is looking at an 8% blow this week.
AI fever was cooling in the runup to Nvidia’s earnings report on Wednesday, and investors looked to the print to alleviate fears that the AI bubble was on shaky ground. Since the launch of ChatGPT in late 2022, the stock has helped power the market to new all-time highs.
But concerns have mounted in recent weeks as tech stocks hit stretched valuations.
Major investors, including Bridgewater’s Ray Dalio told CNBC Thursday that the market is definitely in a bubble.
Much of the worries have stemmed from a boom in capital expenditures spending to support AI, with few signs of a payoff in view for many of the players.
Investor Michael Burry recently accused some of the biggest cloud and infrastructure providers of understating depreciation expenses and estimating a longer life cycle for their chips, calling it “one of the more common frauds of the modern era.”
Earlier this month, Burry revealed bets against Nvidia and Palantir.
Shares of the software analytics company, which supplies AI tools to the government and businesses, are down 11% this week. The stock has shed nearly a quarter of its value this month.
WATCH: Bridgewater founder Ray Dalio: We are definitely in a bubble, but that doesn’t mean you should sell
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