ASML's shares fell by 1.8% amid a broader sell-off in semiconductor stocks after a report indicated that a Chinese company has started producing immersion deep ultraviolet (DUV) lithography machines, a technology ASML has long monopolized.
This development has sparked investor concerns about China's ability to challenge ASML's market position, particularly as these machines are essential for etching circuit patterns into silicon wafers. Despite the initial market reaction, analysts suggest that the impact on ASML may be limited.
They point out that the Chinese machines may only serve lower-end markets and face significant hurdles in achieving yield parity with ASML's products. For instance, Nick Patience from Futurum Group noted that the yield from Chinese machines is currently inferior to that of ASML's, which could hinder their adoption.
Furthermore, the scale of production for the Chinese firm is modest, with plans to produce only five units this year compared to ASML's projected output of 130 DUV machines in 2026. Analysts from SemiAnalysis emphasized that any challenge to ASML's dominance would require the Chinese company to produce reliable machines consistently and support them globally, which appears unlikely at this stage.
Additionally, ASML is already restricted from selling certain tools to Chinese firms due to export controls, meaning that the new Chinese production may not directly affect ASML's revenue. Overall, while the news has caused some volatility, the consensus among analysts is that ASML's strong market position remains intact