ASML faces new Washington export restrictions and emerging Shanghai semiconductor equipment competitor.
ASML Holding Navigates Competing Pressures as Order Book Extends Through 2027
ASML shares gained 0.71 percent to EUR 1,493.80 in pre-market trading on Wednesday, extending a weekly rally of 9.61 percent. The gains persist despite fresh legislative headwinds from Washington and the emergence of China's first credible competitor in immersion deep-ultraviolet (DUV) technology, as investors increasingly look past near-term uncertainty to focus on the strength of ASML's order book.
A bipartisan group in the U.S. Congress has introduced the "Multilateral Alignment of Technology Controls on Hardware" (MATCH) Act, targeting semiconductor equipment destined for China, particularly so-called "chokepoint" technologies that Beijing cannot yet produce domestically. While existing restrictions have centered on cutting-edge extreme-ultraviolet (EUV) systems, the new proposal extends controls to older DUV immersion tools and associated maintenance services. This matters for ASML because China is projected to represent roughly 20 percent of total revenue in fiscal 2025 and 2026. The company's CFO, Roger Dassen, has signaled that demand should recover in the second half of the year. In the first half of 2026 alone, China contributed 16 percent of revenue—approximately EUR 2.9 billion—a significant decline from the 36 percent share of net system sales in the fourth quarter of 2025.
Running parallel to these political pressures is a technological development that has garnered industry attention: Shanghai Aishengna, a state-backed company, has begun small-batch production of immersion DUV lithography systems, marking the first serious Chinese alternative to ASML in the domestic semiconductor market. The company plans to deliver five tools in 2026 and twenty more in 2027, with major Chinese chipmakers including SMIC, Hua Hong, and CXMT already testing the equipment. However, the technology gap remains substantial. Chinese systems currently achieve 28-nanometer structures, while ASML controls 98.7 percent of the global immersion segment. Bernstein analysts characterize the Chinese technology as years behind ASML's capabilities, suggesting that any near-term competitive threat remains limited.
The primary driver of the recent rally is unrelated to China. Goldman Sachs added ASML to its Conviction List after management signaled that manufacturing capacity is fully booked through the end of 2027. Bernstein subsequently placed the stock on its European Conviction List with a EUR 2,500 price target, citing strong orders from logic and DRAM chipmakers that provide better visibility into future growth. This supply-chain confidence is underscored by Zeiss, ASML's key optics supplier, which is expanding its Oberkochen facility by approximately 25,000 square meters. The first employees occupy the newly completed building this month, four years after groundbreaking in 2022. Oberkochen and Wetzlar remain the only sites worldwide capable of producing the optical columns for ASML scanners—a critical bottleneck that, according to ASML's annual report, constrains production capacity. In the low-NA EUV segment, capacity is nearly sold out for 2027, with output rising approximately 30 percent from roughly 65 systems currently, with additional increases under review for 2028.
ASML paid an interim dividend of EUR 1.88 per share on Wednesday and has maintained its raised revenue guidance for 2026 of EUR 43 to 45 billion with a gross margin of 54 to 56 percent. Second-quarter results supported this optimistic outlook, with net sales reaching EUR 9.3 billion—above the company's own forecast—and net income of EUR 2.9 billion.
Not all indicators align positively. The transition to high-NA EUV technology is driving up research costs, and ongoing capacity investments across the supply chain could pressure margins in the near term, even as revenue guidance rises. The stock currently trades 3.62 percent below its 50-day average of EUR 1,538.98 but 22.71 percent above its 200-day average of EUR 1,208.68, with the relative strength index at a neutral 48.9. The stock remains 14.54 percent below its 52-week high of EUR 1,748. The planned shift to 1.4-nanometer chip structures and rapid production ramp of 2-nanometer technology for mobile devices and high-performance computing provide a solid growth foundation independent of China concerns. Investors will receive the next major strategic update at the company's capital markets day on June 10, 2027. The near-term question centers on whether order momentum and easing China concerns can continue to outweigh the dual pressures of emerging competition and investment-driven margin compression.