ASML flagged by China rules

ASML raised its 2026 sales forecast on April 15 after reporting stronger first-quarter results, but its shares fell as investors focused on tougher China export rules. (asml.com) (cnbc.com) The Dutch chip-equipment maker reported first-quarter net sales of 8.8 billion euros, net income of 2.8 billion euros and a 53.0% gross margin. ASML said it now expects 2026 sales of 36 billion to 40 billion euros, up from its January outlook of 34 billion to 39 billion euros. (asml.com) CNBC reported the stock dropped about 6% on April 15 even after the earnings beat. First-quarter sales to China fell to 19% of system sales from 36% in the December quarter. (cnbc.com) ASML sits at the center of chip production because it builds lithography machines, the tools that project circuit patterns onto silicon wafers. Its most advanced extreme ultraviolet machines are already barred from China, while older deep ultraviolet machines have remained a major part of its China business. (cnbc.com) That older business is the one investors are watching now. Reuters reported on April 3 that U.S. lawmakers proposed the MATCH Act, which would tighten limits on immersion deep ultraviolet tools and could also block sales or servicing for several leading Chinese chipmakers. (usnews.com) The bill is still only proposed legislation, and ASML said its current 2026 guidance already includes a range of possible outcomes from export-control talks. Chief Executive Christophe Fouquet said the company’s guidance “accommodates potential outcomes of ongoing discussions around export controls.” (asml.com) Reuters reported that Chief Financial Officer Roger Dassen still expects about 20% of ASML’s 2026 sales to go to customers in China under current assumptions. He also said new restrictions could push results toward the low end of guidance, though some demand could shift to other customers. (usnews.com) The strength on the other side of the ledger is artificial intelligence spending. ASML said customers are accelerating factory expansion plans for 2026 and beyond, and Reuters reported analysts were looking for about 37.7 billion euros in 2026 revenue before the company lifted its range. (asml.com) (usnews.com) ASML also said it expects second-quarter 2026 sales of 8.4 billion to 9.0 billion euros. For now, the company is telling investors it can grow even with tighter rules, but the market is pricing China as the variable that could decide where inside that range it lands. (asml.com)