ASML's China Sales: A First Glimpse into U.S. Chip Export Curbs

ASML Holding NV, the world's leading supplier of lithography systems for the semiconductor industry, recently provided insights into how U.S. export curbs on chip technology are affecting its sales to China. The Dutch company's financial results for the second quarter of 2024 highlighted the impact of these restrictions, offering a first glimpse into the potential consequences for ASML's business in the world's largest semiconductor market.


ASML's sales to China accounted for nearly half (49%) of the company's net system sales in the second quarter, reflecting a 20% increase from the first quarter of 2024. However, the company's overall net sales declined by 7.6% year-over-year, primarily due to geopolitical uncertainties and export restrictions. The decline in sales was driven by a shift in demand from more advanced EUV (extreme ultraviolet) lithography systems to less restrictive DUV (deep ultraviolet) equipment.


ASML's Chief Financial Officer, Roger Dassen, attributed the higher gross margin for the quarter to the sale of more immersion systems than planned. Despite the decline in overall net sales, the company expects total net sales for the next quarter to range between €6.7 billion and €7.3 billion, with R&D expenses estimated at around €1.1 billion.

ASML's CEO, Christophe Fouquet, acknowledged the uncertainty surrounding the semiconductor industry but expressed optimism about improving inventory levels. The company's outlook for the full year remains unchanged, with revenue expected to be similar to last year.

The U.S. administration's consideration of tougher restrictions on chip exports to China has raised concerns about the potential impact on ASML's sales. A recent Bloomberg report suggested that the Biden administration is exploring even stricter rules, which could limit companies like ASML from exporting critical chip-making equipment to China.


ASML has been balancing the U.S. push to tighten export controls with the need to continue selling equipment in its largest market. The company's sales to China have been resilient despite previous U.S.-led chip measures targeting ASML's exports to the Asian nation. However, the potential expansion of the unverified list or the implementation of the foreign direct product rule could subject ASML and other companies to additional controls, further impacting their ability to serve Chinese customers.

In conclusion, ASML's financial results for the second quarter of 2024 provide a first glimpse into how U.S. export curbs on chip technology are affecting the company's sales to China. The shift in demand towards less advanced equipment and the uncertainty surrounding future export restrictions highlight the challenges ASML faces in balancing its business interests with geopolitical tensions. As the U.S. administration considers even stricter measures, ASML and other semiconductor companies must adapt their strategies to mitigate the potential impact on their China sales.