• ASML shares tumble 6.4% to an intraday low following reports that China has begun domestic production of deep ultraviolet lithography equipment.
  • The development raises fears that Chinese chipmakers may reduce reliance on ASML's DUV systems, threatening a key revenue stream.
  • Export controls have already constrained ASML's China sales; local output could further erode market share in the region.

ASML Slumps on China DUV Output Report

ASML Holding NV shares slid as much as 6.4% on Thursday, hitting a session low after reports emerged that China has started producing deep ultraviolet lithography equipment domestically. The news rattled investors who view China as a critical growth market for the Dutch chip-equipment maker.

According to people familiar with the matter, Chinese semiconductor equipment manufacturers have achieved initial production of DUV lithography tools, which are used to fabricate advanced chips. While the systems are likely less sophisticated than ASML's offerings, the milestone signals a potential shift in the competitive landscape.

"This is a significant step for China's self-sufficiency push," said one analyst, who asked not to be named. "Even if the quality isn't there yet, it reduces the urgency for Chinese fabs to buy from ASML, especially given ongoing export restrictions."

ASML has been at the center of US-led export controls targeting China's access to advanced chipmaking technology. In recent months, the Dutch government has expanded licensing requirements for DUV shipments, limiting ASML's ability to sell its most advanced models to Chinese customers.

China accounted for roughly 15% of ASML's sales last year, and any reduction in orders could weigh on the company's revenue outlook. The stock has lost about 10% this year amid regulatory uncertainty.

Market Reaction and Implications

Trading volume spiked after the report, with shares briefly dipping below €840 before paring some losses. The broader European technology sector also declined, with peers like ASM International and BE Semiconductor Industries falling 2-3%.

Investors are now questioning whether ASML's dominance in DUV lithography is under threat. "China has been investing heavily in domestic equipment makers, and this is a clear sign of progress," said a portfolio manager at a European asset manager. "While I don't see an immediate impact on ASML's near-term orders, it's a risk that can't be ignored."

A spokesperson for ASML declined to comment on the report. The company is set to report first-quarter earnings next week, which may provide more clarity on China demand.

*Correction: A previous version of this article misstated the day's low price. The correct figure is €838.