⚠ China & Export-Control GeopoliticsHigh threat

The single most important external risk to ASML is that it sits squarely at the center of the technology war between the United States and China, its commercial freedom subordinated to a geopolitical struggle it cannot control. Because EUV and advanced lithography are treated as strategic national-security assets¹, ASML is not free to sell to whomever it wishes: under sustained US pressure, the Dutch government has barred it from shipping EUV machines to China entirely, and has progressively tightened restrictions on even the older DUV systems. This is not a commercial choice ASML made; it is policy imposed on it by governments using its monopoly as an instrument of statecraft.

The stakes are large. China was 36% of ASML's sales in 2024 and 29% in 2025² — a huge market, swollen further as Chinese chipmakers rushed to buy every machine they were still allowed before the rules tightened — and that revenue is now shrinking: 15.9% of sales in the first half of 2026³, and potentially less as controls ratchet down. Each tightening removes a slice of ASML's addressable market, and there is always the risk of a sharper escalation: broader bans, restrictions on servicing machines already sold to China, or Chinese retaliation against ASML's operations there. The company is exposed to decisions made in Washington, The Hague, and Beijing, none of which it can influence, and any of which can reshape its business overnight.

The deeper, longer-term danger is what cutting China off provokes. By denying China access to the machines it needs, the export controls hand Beijing the strongest possible incentive to build a domestic lithography industry, and China is pouring national resources into the attempt — funding companies like SMEE and an entire homegrown supply chain with the patience only a state can bring. The honest assessment is that China remains many years, most likely well over a decade, behind in the technology, and replicating ASML's full ecosystem is a task of staggering difficulty that may never wholly succeed. But a determined, well-funded, strategically-motivated national effort is the one kind of competitor that could, over a long horizon, both supply China's own market and eventually challenge ASML at the mature end. The monopoly on the machines remains intact and the barriers enormous, but ASML's China exposure is a near-term drag on revenue, a source of headline and escalation risk, and the seed of the one long-term competitive threat with the resources to matter. It is the price of being a strategic chokepoint in an age of technological nationalism: indispensable, and therefore fought over.