ASML Navigates New U.S.-China Export Rules Amid Software Restrictions

ASML, a leading computer chip equipment manufacturer, is currently assessing the implications of new U.S. export restrictions on semiconductor technology to China. Despite the recent regulations, ASML maintains that its financial outlook remains unchanged, projecting significant sales growth in the coming years.

Key Takeaways

• ASML does not expect the new U.S. restrictions to impact its financial guidance.
• The Dutch government is reviewing the U.S. export rules and shares concerns over semiconductor equipment exports.
• ASML anticipates a decrease in sales to China, projecting around 20% of total sales by 2025.
• The U.S. has tightened regulations on exports to 140 Chinese companies, including major players in the semiconductor industry.

Overview of New U.S. Regulations

The U.S. government has implemented its third round of restrictions in three years aimed at curbing China's semiconductor capabilities. The latest rules specifically target the export of advanced semiconductor manufacturing tools and software, which are crucial for companies like ASML.

The restrictions include:

• Tighter regulations on software: This affects computational lithography, a technology used to enhance the performance of lithography machines.
• Export limitations: The rules restrict exports to 140 Chinese companies, including subsidiaries of major chipmaker SMIC.

ASML's Response to the Regulations

In light of the new regulations, ASML has reiterated its financial guidance, projecting group sales between 30-35 billion euros ($31.5-36.7 billion) by 2025. The company expects that approximately 20% of its sales will come from China, a significant drop from around 50% this year.

ASML stated:

"Long term, our scenarios for demand in the semiconductor industry are not expected to be impacted by the new regulations, as our scenarios are based on global demand."

Dutch Government's Position

The Dutch government has expressed its alignment with U.S. security concerns regarding the export of advanced semiconductor equipment. A statement from the Dutch foreign ministry emphasized that each country must assess its own national security threats and take appropriate measures.

Market Reaction

Following the announcement of the new U.S. rules, ASML's shares saw a slight increase, closing 0.9% higher at 664.10 euros in Amsterdam. This reflects investor confidence in ASML's ability to navigate the changing regulatory landscape without significant disruption to its business model.

Conclusion

As ASML studies the implications of the new U.S.-China export rules, the company remains optimistic about its long-term growth prospects. With a strategic focus on global demand and a commitment to innovation, ASML is poised to adapt to the evolving semiconductor market while addressing the challenges posed by international regulations.

Sources

• ASML not changing guidance after new US crackdown on China chip exports, Yahoo.
• ASML not changing guidance after new US crackdown on China chip exports, Yahoo.
• Applied Materials outlook unchanged after latest US crackdown on China chip exports, Yahoo.