(Bloomberg) — ASML Holding NV fell as the prospect of tougher U.S. restrictions on its China business offset growth in the Dutch firm’s order intake last quarter.
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The Biden administration is considering using the toughest trade restrictions available if companies including ASML continue to give China access to advanced semiconductor technology, Bloomberg News reported Wednesday before the company released second-quarter results.
The US is targeting ASML, which has a monopoly on the manufacturing of machines that make the most advanced semiconductors, as it steps up pressure to curb Chinese advances in the semiconductor industry. Shares fell even as the company reported that bookings rose 54% in the second quarter from the previous three months to 5.57 billion euros ($6.1 billion), beating estimates.
“The geopolitical angle, however, is likely to be more in focus today than the results, with Bloomberg reporting that the US is pushing for additional restrictions on ASML,” Citi analyst Andrew Gardiner said in a note. “Pressure is mounting to limit service activity to the installed base.”
ASML shares fell as much as 7.7% to €903 in Amsterdam, the most since October 2022.
ASML sees sales in the current quarter between 6.7 billion and 7.3 billion euros, missing estimates of 7.5 billion euros. The company confirmed previous guidance of flat sales this year before returning to strong growth in 2025.
Previous US-led chip measures targeting ASML’s exports to China did not dampen demand from the Asian nation. China accounted for nearly half of ASML’s revenue in the second quarter, and sales in the country rose 21% from the previous period. Beijing has bought unlimited old equipment to make more mature types of semiconductors.
ASML is increasingly driven by the demand for high-power chips needed for AI applications.
“We currently see strong developments in AI, driving much of the industry’s recovery and growth, ahead of other market segments,” chief executive Christophe Fouquet said in the statement.
Impressive results from some of ASML’s largest customers helped support demand for the company’s equipment. Last week, Taiwan Semiconductor Manufacturing Co. said second-quarter sales grew at their fastest pace since 2022, driven by the AI boom that is driving data center investment around the world. Sales in Taiwan rose by 290 million euros in the quarter as demand for advanced equipment also increased.
The latest quarter was ASML’s first under Fouquet, who took over when Peter Wennink retired in April. He has tried to balance a US push to tighten export controls for China with the need to keep selling equipment in the company’s biggest market.
U.S. pressure to slow Beijing’s advances in semiconductor manufacturing led the Netherlands to halt exports to China of ASML’s second most advanced category of machines, immersion DUV lithography machines, earlier this year.
However, ASML continues to service machines that were purchased before the restrictions were imposed. The Biden administration has told allies it is considering using the foreign direct product rule, which allows the U.S. to impose controls on foreign-made products that use even the smallest amount of American technology, if such practices continue, according to Bloomberg reports.
The company has said that up to 15% of sales in China this year will be affected by export control rules imposed in January. ASML has never been allowed to sell its cutting edge extreme ultraviolet technology in China.
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