ASML shares tumble after reports that China has begun domestic production of deep ultraviolet lithography machines, a move that could erode one of the Dutch chip-equipment maker’s most defensible markets and deepen the pressure from U.S.-China export controls.
ASML Sinks on China DUV Production Threat
The development matters because DUV lithography is still central to chip production, including processes down to 7 nanometers, and Beijing’s push to build the tools locally is a direct attempt to reduce dependence on foreign suppliers. For ASML, which has long dominated advanced lithography, any credible Chinese alternative threatens a market that has been protected not just by technology leadership but also by geopolitics.
Sentiment IndicatorsⓘProprietary · adalytica.com · July 28, 2026
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ASML fell 11.1% to 1,582.95 on July 28 after dropping another 4.1% the previous session, extending a slide that has taken the stock below its 50-day moving average of 1,743.17. The stock is also trading well under its 200-day average of 1,379.84 after a volatile run that included a June peak above 1,900, and RSI readings at 33.5 point to oversold conditions even as selling pressure persists.
The market reaction is a warning that investors are reassessing the durability of ASML’s growth story in China. The company has been one of the most strategic beneficiaries of global semiconductor spending, but the emergence of domestic DUV production in China raises the risk of a longer-term share shift in the world’s largest chip manufacturing market.
The move also feeds into a broader industry response to U.S. export restrictions, which have forced Chinese chipmakers to accelerate self-sufficiency efforts across the semiconductor supply chain. If the new tools are deployed at scale, they could blunt the effectiveness of Western controls and strengthen China’s ability to expand output without relying on imported equipment.
The pressure is not isolated to ASML. U.S. equipment makers tied to the same capital-spending cycle are also wobbling, with Applied Materials falling to 476.46 from 723 earlier this month and Lam Research dropping to 269.61 from 433.33 on June 30, reflecting a sector-wide de-risking around China exposure and the pace of semiconductor investment.
ASML had recently been trading on stronger fundamentals, after reporting second-quarter sales of €9.3 billion and lifting its 2026 revenue outlook to €43 billion-€45 billion with gross margin guidance of 54% to 56%. That makes the share slump more striking: investors are looking past near-term execution and focusing on whether Chinese localization could cap future pricing power and order growth.
For investors, the key question is whether China’s domestic DUV capability stays a niche workaround or becomes a meaningful substitute that reshapes equipment demand. The next catalyst will be evidence of how quickly Chinese fabs can integrate the new machines and whether ASML’s China-related orders, margins and guidance hold up through the second half of 2026.
| Entity | Gains | Losses |
|---|---|---|
| Chinese chipmakers | ▲More equipment autonomy | ▼Less dependence on imports |
| ASML | ▲Near-term demand resilience elsewhere | ▼China competitive pressure |
| U.S. export-control hawks | ▲Stronger justification for restrictions | ▼Risk of policy circumvention |
| Semiconductor equipment rivals | ▲Broader sector re-rating risk | ▼China-related order uncertainty |
