DUV Demand Powers ASML Holding in China: Will Export Curbs Cut It Off?

ASML Holding’s ASML sales to China accounted for 27% of first-quarter 2025 total revenues, which was way higher than the earlier expectations of low-20% levels. This increase came mainly from strong demand for Deep Ultraviolet (“DUV”) lithography systems, which Chinese chipmakers use to manufacture mature-node chips, such as those based on the 28nm process. These chips are widely used in products like smartphones, appliances and automotive parts.

However, ASML Holding’s newer EUV (Extreme Ultraviolet) systems are still restricted from shipping to China due to U.S. and Dutch export controls. These restrictions aim to prevent China from producing cutting-edge chips used in advanced computing and military applications. The situation creates an ongoing risk for ASML’s China business, especially as trade tensions continue to rise.

So far, ASML Holding has not seen any impact on customer behavior or order cancellations. On the first-quarter earnings call, management confirmed that business discussions remain unchanged. However, they also admitted that the trade environment is increasingly uncertain. ASML is working with both customers and suppliers to limit the effects of potential new rules, but it’s difficult to predict how things will evolve.

While China’s demand for DUV systems remains strong for now, any tightening of trade rules could hurt ASML Holding’s future revenues. A wider geopolitical conflict or sudden rule changes could delay shipments or lead to fewer orders from Chinese customers.

How Are ASML’s Rivals Positioned Amid China Curbs?

Export restrictions on advanced semiconductor chips and equipment have been impacting every company in the space, including Applied Materials AMAT and Lam Research LRCX.

Applied Materials supplies equipment used in chip fabrication, including deposition and etching tools that are essential for both advanced and mature nodes. While it also faces export limits, Applied Materials has a broader product range that serves older technology nodes still in demand in China.

Meanwhile, Lam Research specializes in wafer etching and cleaning tools. Like ASML, Lam Research is exposed to U.S. export policies, but it can ship tools for legacy nodes that China continues to ramp up.

Both companies, AMAT and LRCX, have longstanding customer relationships in China and could see higher tool sales if ASML’s DUV shipments slow. Although they don’t compete directly with ASML in EUV lithography, they offer complementary tools, and in times of restriction, their broader portfolios may give them more flexibility.

ASML’s Share Price Performance, Valuation and Estimates

Shares of ASML Holding have risen around 15.4% year to date compared with the Zacks Computer and Technology sector’s gain of 7%.

From a valuation standpoint, ASML trades at a forward price-to-sales ratio of 8.23, significantly higher than the sector’s average of 6.57.

The Zacks Consensus Estimate for ASML Holding’s 2025 and 2026 earnings implies a year-over-year increase of approximately 32% and 10.1%, respectively. Estimates for 2025 have been revised upward in the past seven days, while those for 2026 have moved south over the same period.

ASML Holding currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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