Shares of ASML slid 3.6% to $1,569 on July 7 as investors repriced the risk of Washington tightening the screws on the Dutch company's remaining chip-tool sales to China. The selloff caps a volatile stretch — the stock has tumbled roughly 9% from its June 30 close of $1,721 — as geopolitical anxiety collides with profit-taking after a strong first-half run.
• China's Share Is Shrinking, and Congress Wants It Smaller Still
China accounted for 36% of ASML's net system sales in Q4 2025, but that figure plunged to 19% in Q1 2026.
ASML has forecast China will represent about 20% of total sales this year. But the bipartisan MATCH Act, introduced in April, threatens to squeeze even that. The bill would ban all shipments of ASML's older-generation tools to China — the permitted equipment that constitutes roughly 20% of 2026 revenue — and force the Netherlands to match U.S. controls within 150 days or face unilateral action.
Analysts at Quilter Cheviot estimate a broad ban could reduce ASML's overall revenue by approximately 5%.
• The Numbers Still Look Good — For Now
ASML reported €8.8 billion in Q1 2026 sales and €2.8 billion in net income, guiding full-year revenue to €36–40 billion with margins of 51–53%.
After beating expectations, the company raised its full-year 2026 revenue guidance, with Q1 net sales up 13% year over year. The question is whether that guidance already prices in the worst-case China scenario or merely a moderate one.
• AI Spending Is the Offset — but Is It Enough?
ASML's China sales carry above-average margins because they are heavy on older "immersion" tools, which come with very good gross margins. Losing that mix is dilutive. Investors who bought ASML on the thesis that China would stabilize at 20% of revenue may need to revise that assumption downward — potentially more than once.
Whether demand from TSMC, Samsung, and Intel in the U.S., Korea, and Taiwan can absorb the China shortfall depends on how aggressively those customers ramp AI-related capital spending.
• The Dutch Government Is Pushing Back, but Leverage Is Limited
The Dutch government has pushed back; Prime Minister Dick Schoof raised ASML's situation directly in White House meetings. Yet key parts of ASML's most advanced systems remain tied to U.S.-controlled technologies, making it difficult for the company to make fully independent commercial decisions. That dependency gives Washington outsized sway over a European company's order book.
At $1,569, the market is betting the China headwind isn't over. The real test: whether ASML's next quarterly update trims the €36–40 billion target — or proves AI demand is strong enough to render China a rounding error.