Key Takeaways
- The MATCH Act, recently proposed by U.S. legislators, seeks to prohibit DUV lithography equipment exports to China
- Shares of ASML declined by as much as 4.7% during Amsterdam trading sessions before settling at a 4.1% loss
- Chinese markets represent approximately 20% of ASML’s projected 2026 revenue
- According to JPMorgan analysis, the proposed legislation could reduce ASML’s earnings per share by as much as 10%
- The proposed legislation has support from both major political parties and seeks to harmonize export controls across allied nations
Shares of semiconductor equipment manufacturer ASML experienced significant downward pressure on Tuesday following the unveiling of proposed U.S. legislation that threatens to eliminate a key revenue stream from Chinese customers.
The proposed legislation, titled the MATCH Act — an acronym for Multilateral Alignment of Technology Controls on Hardware Act — was put forward last Thursday by a cross-party coalition spearheaded by Representative Michael Baumgartner from Washington state.
Should the measure become law, it would prohibit the export of deep ultraviolet (DUV) lithography equipment to China, effectively shutting down a sales channel that Chinese semiconductor manufacturers have relied upon within current regulatory parameters.
ASML has historically refrained from selling its cutting-edge EUV systems to Chinese customers. However, DUV equipment, which plays a crucial role in memory chip production and components for standard consumer electronics, has remained accessible through existing Dutch export licensing frameworks. The MATCH Act would eliminate this avenue entirely.
The company’s shares plummeted as much as 4.7% during Amsterdam trading hours before moderating to approximately 4.1% lower at €1,114 by midday. During U.S. pre-market activity, shares traded at $1,286.76, representing a 1.32% decline.
Wall Street Analysts Divided on Impact Assessment
Analysts from Citi characterized the development as having negative implications, though they refrained from providing detailed financial impact estimates.
JPMorgan analyst Sandeep Deshpande offered more concrete projections, suggesting that ASML’s earnings per share could experience a reduction of up to 10% should the restrictions be implemented. He noted that while revenue from alternative geographic markets would likely increase, it would probably fall short of compensating for the Chinese market losses.
Michael Roeg, an analyst with Degroof Petercam, adopted a more conservative stance, projecting that revenue impact would fall within a “single digit” percentage range.
ASML representatives chose not to provide commentary on the matter. Dutch governmental officials stated that commenting on legislative proposals from the U.S. Congress falls outside their purview.
Understanding the MATCH Act’s Broader Objectives
The proposed legislation extends beyond its implications for ASML alone. According to the bill’s sponsors, it addresses vulnerabilities in existing export control frameworks that China has capitalized on due to inconsistent implementation among U.S. allies.
“While the US has imposed extensive export controls to slow China’s semiconductor indigenization, US allies have not fully matched these measures,” Baumgartner’s office said in a statement on April 2.
ASML has projected that Chinese customers will comprise approximately 20% of total company revenue in 2026. Exports of legacy equipment and less sophisticated machinery would remain unaffected under the current legislative proposal.
The Dutch government now confronts mounting pressure from Washington regarding export policy decisions — a politically delicate situation given ASML’s status as one of the Netherlands’ most strategically vital corporations.
The most recent instance of new restrictions being applied to ASML’s Chinese operations occurred in September 2024.
