Due to restrictions imposed by the United States on Dutch company ASML, the firm’s export of high-end lithography machines and other equipment to the Chinese mainland has been significantly affected. ASML, a leading supplier in the semiconductor industry, has seen a substantial impact on its business in the Chinese market.
The Chinese mainland was once a crucial market for ASML, accounting for nearly half of its global sales. However, owing to the US restrictions, ASML’s orders in the Chinese mainland have sharply declined in the third quarter of 2024. The company anticipates that its revenue proportion from the Chinese market will drop to about 20 percent in 2025.
This downturn has led to ASML’s order volume being less than half of expectations, with net profit falling by nearly 16 percent year on year. The company’s stock price has also plummeted, facing its largest drop in 26 years.
Christophe Fouquet, the CEO of ASML, expressed concerns over the situation. He pointed out that the US restrictions on ASML’s normal business operations harm the company’s economic interests, emphasizing that the Chinese mainland is an important market globally. Fouquet warned that such restrictions might trigger greater backlash and emphasized that decoupling the global semiconductor supply chain is neither feasible nor beneficial, as it would be expensive, complex, and misaligned with economic development needs.
ASML is actively engaging with the United States to clarify the scope and impact of the export control regulations. The company aims to secure its business autonomy and uphold the “spirit of the contract.”
The most direct consequence of the US restrictions on European companies like ASML is a limitation in market share, reduced revenue and profits, and restricted investment and development. The decline in market share and profits means European technology companies have limited funds for research and development, potentially leading to cuts in R&D budgets and affecting their innovation capabilities and technological advancement speed in related fields.
In response to these challenges, countries such as Germany, France, and Sweden are launching domestic initiatives to support startups in key sectors and reduce reliance on US tech firms. European governments are actively countering the challenges posed by US policies like “America First” through policy initiatives, funding programs, and strategic alliances. These efforts aim to strengthen Europe’s technological sovereignty and foster innovation by building self-reliant ecosystems in critical sectors.
Regulations such as the Digital Markets Act and the Digital Services Act are designed to curb the dominance of US tech giants like Google, Amazon, and Apple, creating a fairer market for European companies.
The “America First” policy often involves tariffs, trade restrictions, and a push for domestic procurement, emphasizing domestic economic growth, protectionism, and prioritization of US industries. Such policies reduce opportunities for collaboration on research and development or regulatory alignment, significantly impacting the long-term development of European technology companies.
For European tech firms, this could mean reduced access to the lucrative US market or increased costs of doing business there. Companies may face challenges in scaling their operations globally, as the US is a key market for many tech sectors, including software, hardware, and advanced manufacturing. Restrictions on technology sharing or joint ventures may also arise due to concerns about intellectual property and national security.
European tech companies could face isolation in critical areas of innovation, limiting their ability to benefit from shared knowledge and resources.
Reference(s):
Dutch firm ASML becomes 'hostage' in China-US tech competition
cgtn.com
