U.S.-China AI feud sees ASML on tightrope between sales, geopolitics

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ASML is performing a balancing act.

On the one hand, sales from China still make up a sizable chunk of its revenue. 

While down compared to previous years, China will contribute around 20% of ASML’s net sales across the whole of 2026, CFO Roger Dassen said in a transcript of a video interview.

On the other hand, political headwinds in the U.S. are pushing strict export controls on sales of chipmaking hardware to Beijing, as the battle for AI supremacy between the two countries intensifies.

It leaves Europe’s most valuable company in a delicate position of looking to simultaneously keep Western governments and shareholders happy. Demand for ASML machines is growing in China — but so too are calls in Washington to tighten export restrictions further.

“China remains to be an important market for ASML, while the Dutch supplier looks to walk a geopolitical tightrope between Beijing and Washington,” Neil Shah, VP research at Counterpoint, told CNBC.

Stepping back for a moment, on Wednesday ASML raised its guidance for the second time this year and reported stronger-than-expected quarterly results as its customers continue to ramp up production of AI chips. 

Stock stayed largely flat despite the blowout earnings (as is proving a bit of a theme this year among AI firms).

But for me, the really interesting story is the one at the intersection of AI and geopolitics. In this case, it’s ASML’s activity in China. 

As it stands, the Dutch giant doesn’t ship its most advanced chipmaking equipment — which includes extreme ultraviolet lithography (EUV) machines — to the country, after years of export restrictions. Some less advanced deep ultraviolet (DUV) lithography machines are bought and sold in China, however — and there’s big numbers involved.

Sales in China hit 2.9 billion euros ($3.3 billion) in the first six months of 2026, roughly 16% of total revenue. 

Dassen’s comments that Chinese sales will make up around 20% of net sales across the whole of 2026, point to revenue from the country increasing in the second half of 2026 compared to the first. 

“The Chinese market is moving in sync with the overall behavior that we see globally,” Dassen said. “If you really want to pinpoint where is that extra demand in China? It is primarily in the Logic business and then primarily catering to domestic led demand.”

Chinese semiconductor equipment spend is expected to grow around 10% every year for the next 24 months, David Dai, senior analyst at Bernstein, told CNBC.