ASML Shares Drop Amid Reports of Chinese DUV Lithography Production
Shares of ASML (NASDAQ: ASML) fell as much as 8.2% on Monday before settling at a 6.7% decline, reacting to reports that China is beginning mass production of deep-ultraviolet lithography machines. The news comes after the stock had surged over 75% in late June and was trading at more than 60 times earnings. According to tech publication The Information, an unnamed state-backed Chinese company has started manufacturing DUV systems, which are less advanced compared to ASML's extreme ultraviolet (EUV) machines. While the U.S. restricts China from purchasing EUV equipment and some advanced DUV models, investors reacted negatively due to concerns over potential competition. However, analysts argue that this threat is overstated given declining percentages of both DUV sales and Chinese market exposure in ASML's revenue mix. Additionally, global demand for DUV machines remains strong outside China, particularly driven by the AI boom.