ASML Holding Plunges 4.56% Amid US-China Tech Tensions

On April 7, 2025, ASML Holding's stock experienced a significant drop of 4.56% in pre-market trading.

ASML Holding, a Dutch company, is the sole manufacturer of reliable equipment for etching the most advanced semiconductors, ranging from AI accelerators to smartphone chips. Even in less complex processors found in cars and washing machines, their machines dominate over 90% of global sales. However, ASML's dominant position has not shielded it from challenges. The U.S. has banned ASML from selling its most advanced equipment to Chinese companies to curb China's AI ambitions, and demand for ASML's more basic tools has also waned.

The Dutch government, under pressure from the U.S. Biden administration, is facing a dilemma over whether to restrict ASML's exports to China. Dutch Prime Minister Mark Rutte emphasized the importance of making independent policy decisions, highlighting the strong trade relations between the Netherlands and China. This geopolitical tension adds to the uncertainty surrounding ASML's future operations and market position.

Recent technological advancements by China, such as the development of a fully solid-state deep ultraviolet laser by the Chinese Academy of Sciences, pose a significant threat to ASML's market dominance. This breakthrough, which does not rely on ASML's excimer laser technology, could potentially reduce China's dependence on ASML's equipment, further complicating ASML's strategic position.

ASML's CEO, Peter Wennink, has expressed frustration with the lack of support from European officials, threatening to relocate the company if better protection is not provided. This sentiment reflects the broader concern among European companies about the U.S.'s economic influence and the potential for similar scenarios to unfold in the future.