ASML warned the Trump administration that restrictive export controls on semiconductor manufacturing equipment to China threaten U.S. chipmaker competitiveness.

ASML Holding N.V. (NASDAQ: ASML) has issued a warning to President Donald Trump as Washington pressures allies to tighten controls on China's access to advanced semiconductor technology: excessive restrictions can backfire. CEO Christophe Fouquet argues that going too far could accelerate China's efforts to develop its own chipmaking capabilities—potentially creating the stronger competitor that export controls are meant to prevent.

ASML already faces restrictions on selling its most advanced equipment to China, including extreme ultraviolet (EUV) lithography systems essential to producing the most advanced chips used in AI applications. In an interview with the Financial Times, Fouquet acknowledged that some technology restrictions may be necessary for security reasons, but expressed concern about overly broad measures. "If you over-restrict, you bring desperation," he said, contending that desperation creates a stronger incentive to build competing technology.

This concern has historical precedent. Fouquet pointed to Huawei's emergence as a significant force in China's development of deep ultraviolet (DUV) lithography technology—a case study in how restrictions can spur domestic alternatives rather than stall them.

The issue is particularly acute for ASML given the extraordinary complexity of its manufacturing. The company's EUV machines involve more than 100,000 parts supplied through a network of 200 principal suppliers and roughly 2,000 companies. This ecosystem is too intricate to simply scale up through additional investment, according to Fouquet, making the manufacturing process itself a critical bottleneck.

The strategic concern runs deeper than near-term revenue loss. Fouquet warns that restrictions can fundamentally change incentive structures. As Western technology becomes harder to access, developing alternatives becomes more strategically valuable for China—a dynamic that transforms export controls from a permanent barrier into a temporary delay with long-term consequences. The central tension: restrictions may slow technological access today while increasing the motivation to replace that technology tomorrow.

For investors, the debate hinges on a fundamental question: whether restrictions remain narrowly targeted or become broad enough to accelerate the domestic alternatives Fouquet is warning about. For ASML, the China debate is ultimately about how long its technological lead can remain a monopoly.