ASML's Investor Day: A Focus on U.S.-China Relations

By Toby Sterling

AMSTERDAM (Reuters) – The looming threat of further U.S.-led restrictions on ASML's sales to China will be a major topic during the company's biannual Investor Day, where it will share new medium- and long-term financial guidance.

Analysts anticipate only modest adjustments to ASML's long-term outlook, given its near-monopoly status in lithography systems, which are essential for chipmakers to produce circuitry.

ASML's technology is crucial yet vulnerable to geopolitically-driven restrictions amidst escalating U.S.-China tech rivalry. The future depends on whether incoming U.S. President Donald Trump will impose further restrictions as he did in his first term.

The key financial question for ASML is its ability to continue outpacing the overall computer chip market growth, as it has over the last decade through enhanced productivity for its major client, TSMC of Taiwan.

Success will hinge on customer preference for ASML's machines, which are necessary for miniaturizing chips versus other design strategies. As long as ASML maintains its edge in high-end lithography, it should continue to grow.

ASML forecasts sales between 44 billion and 60 billion euros by 2030, corresponding to an 8-14% growth from an expected 27.5 billion euros ($29.22 billion) this year.

This Investor Day follows ASML’s third-quarter report, marking its largest earnings miss in years due to weak chip markets, despite an AI boom. Regaining investor confidence while navigating the impact of China trade restrictions, a variable beyond its control, is crucial.

China has been ASML's largest market for the past six quarters, making up over 40% of total sales, reflecting genuine demand rather than preemptive stockpiling.

Existing U.S.-Dutch restrictions mean ASML can only export its oldest DUV product lines to China without a license. The company expects China to contribute approximately 20% of sales from 2025 onward.

ASML faces competition in older lines from Japan's Canon and Nikon, as well as from Chinese competitor SMEE, highlighting the considerations governments must take into account regarding the effectiveness of further restrictions.

($1 = 0.9412 euros)