ASML 2025 outlook shows US chip export curbs impacting China sales


An ASML icon is being displayed on a circuit board, alongside the flags of the USA and China, in this photo illustration taken in Brussels, Belgium, on January 4, 2024.

Jonathan Raa | Nurphoto | Getty Images

ASML finally offered a first glimpse into how U.S. restrictions on exports of its advanced chip manufacturing tools to China will impact its sales in the Asian country.

The Netherlands-based chip equipment maker said in its earnings report Tuesday, which was released a day early due to a “technical error,” that it expects net sales for 2025 to come in between 30 billion euros and 35 billion euros ($32.7 billion and $38.1 billion). This is at the lower half of the range ASML had guided previously.

ASML is a critical part of the global chip supply chain. The firm’s extreme ultraviolet lithography machines are used by many of the world’s largest chipmakers — from Nvidia to Taiwan Semiconductor Manufacturing — to produce advanced chips.

While third-quarter net sales at the firm reached 7.5 billion euros — beating expectations — net bookings came in at 2.6 billion euros ($2.83 billion), the company said. That was well below a 5.6 billion euro consensus estimate from LSEG.

ASML shares plunged as much as 16% on Tuesday in response, causing the firm to shed over $50 billion in market capitalization in a single day, according to CNBC calculations using LSEG data.

Beyond the disappointment on bookings — which analysts said was due to weakness in a select number of customers, including Intel and Samsung — AMSL also gave an indication of how geopolitical tensions are putting pressure on its 2025 outlook.

Roger Dassen, ASML’s chief financial officer, said on a call with analysts Wednesday that the company expects China sales to drop next year, citing U.S. export restrictions as one of the reasons.

“We all read newspapers, right? We all see that there is speculation around around export control,” Dassen said in response to an analyst question on why the company sees revenue in China slumping next year. “That is a driver for us to take a more cautious view on the China sales.”

UBS analysts said the change in ASML’s 2025 guidance was mainly related to delays with the development of new logic fabrication facilities from Intel and Samsung, adding that the new guidance implies sales to China would fall 25% to 30% in 2025.

How important is China to ASML?

ASML’s China-based customers have been stockpiling the firm’s less advanced machines to get ahead of U.S. export restrictions on the Dutch firm and to continue being able to access its critical technology, which enables them to manufacturer chips for the electronics industry.

ASML has never sold its most advanced extreme ultraviolet lithography, or EUV machines to Chinese customers due to previous restrictions.

Instead, chip firms in the country have opted to order ASML’s deep ultra violet lithography, or DUV machines. DUV machines are ASML’s second-tier lithography systems that are critical to make the circuitry of chips.

Last year ASML sourced 29% of its sales from China. It now expects that contribution from China to drop to around 20% of its total revenue in 2025.

Sales to China grew dramatically in the first three quarters of 2024 as customers scrambled to buy ASML’s DUV machines in bulk head of U.S. and Dutch export restrictions.

In the company’s second-quarter 2024 earnings presentation, ASML said that it sourced as much as 49% of its sales from China.

In September, the Netherlands expanded export restrictions on advanced chip manufacturing equipment by bringing licensing requirements of ASML’s machines under its purview and thereby taking over from the U.S. on controlling what machines ASML is able to export to other countries.

The move meant that the Dutch government would be able to effectively block ASML from maintaining the DUV machines it has sold to China so far.

“China is a very important market for ASML,” Chris Miller, assistant professor of international history at the Fletcher School of Law and Diplomacy at Tufts University and author of the book “Chip War,” told CNBC in emailed comments. “Most of this revenue is from older-generation chipmaking tools.”

Ironically, restrictions on exports of DUV machines to China “have probably helped ASML on net, because China has accelerated purchases of older generation DUV tools as a result,” Miller added.

Now, ASML is expecting a drop-off in sales to China as a result of U.S. trade restrictions. The firm expects China to return to taking up a smaller share of its overall global sales in 2025, CFO Dassen said in a transcript of a video interview Tuesday.

“We do see China trending towards more historically normal percentages in our business,” Dassen said. “So we expect China to come in at around 20% of our total revenue for next year. Which would also be in line with its representation in our backlog.” 

Ramp up of next-generation chip tech will support ASML long term, analyst says

Analysts at Bank of America said the firm faces a “sharp decline in China revenues.” They added that ASML’s forecast of China accounting for around 20% of its revenue in 2025, implies a 48% revenue decline year-over-year — more severe than the 3% they had anticipated.

Abishur Prakash, founder of Toronto-based advisory firm The Geopolitical Business, said that demand from China for ASML’s machines is likely to drop significantly as the firm is “severely restricted by export controls.”

“Like Intel, for whom China is the largest market, ASML is deeply reliant on China,” Prakash told CNBC via email. “For ASML, it is watching what is taking place with China as a potential restriction on business.”

“As the chip world is cut from China, ASML could see demand for its equipment drop — from China and elsewhere,” Prakash added.



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