ASML Faces a Twin Squeeze: Washington Tightens the Screws While TSMC Hits Pause

ASML navigates dual headwinds: a US bill targeting DUV sales to China and TSMC postponing high-NA EUV purchases until 2029, testing its stock resilience.

The Dutch semiconductor equipment giant ASML finds itself navigating a rare confluence of headwinds. On one front, a new bipartisan bill advancing through the US Congress threatens to sever its remaining business with China. On another, the company’s most important customer, Taiwan’s TSMC, has pushed back the adoption of its most advanced chipmaking machines by several years. The combined pressure tests a stock that has more than doubled from its 52-week low.

The MATCH Act Targets the Last Loophole

The US House Foreign Affairs Committee has approved the so-called MATCH Act, legislation designed to block the sale and maintenance of ASML’s deep ultraviolet (DUV) immersion lithography tools to China. This is a significant escalation. While earlier restrictions focused on the most cutting-edge extreme ultraviolet (EUV) machines, DUV immersion technology remains the critical gap that Chinese chipmakers cannot yet fill domestically.

The bill’s most aggressive provision targets after-sales service. Without ongoing maintenance, Chinese fabs would gradually lose production capacity, effectively strangling the installed base. The legislation gives the US administration 150 days to negotiate aligned export controls with allies. Should that fail, Washington would act unilaterally, using the Foreign Direct Product Rule to extend controls to any foreign product containing US software or components.

ASML’s China exposure has already been shrinking. The region accounted for 36% of total revenue in the fourth quarter of 2025, but that figure dropped to 19% in the first quarter of 2026. Management’s full-year guidance had pencilled in roughly 20% from China—and that forecast does not yet incorporate the potential impact of the MATCH Act. JPMorgan estimates that a complete DUV ban could shave up to 10% off earnings per share.

TSMC Delays High-NA EUV Until 2029

On the technology frontier, ASML’s most advanced product faces a delayed adoption curve. TSMC has decided to postpone purchases of the new high-NA EUV lithography systems until 2029. Each machine costs upwards of €350 million, and the Taiwanese chipmaker is prioritising cost discipline. For its upcoming A13 chip generation, TSMC will rely on existing EUV technology rather than making the leap to high-NA.

Analysts have taken a surprisingly sanguine view of the delay. By deferring the capital expenditure, TSMC preserves its own margins, and ASML’s quasi-monopoly in lithography means the demand is merely postponed, not lost. The company expects the broad commercial breakthrough for high-NA to begin around 2027. In the meantime, Intel is positioning itself as an early adopter, aiming to use the machines for its next-generation chips.

Strong Fundamentals Mask the Noise

Despite the political and customer-driven headwinds, ASML’s operational performance remains robust. First-quarter revenue reached €8.8 billion, generating a net profit of over €1 billion. The company’s full-year 2026 revenue guidance stands at €36 billion to €40 billion, with management acknowledging that the wide range already factors in ongoing export control discussions.

The stock has been remarkably resilient, trading around €1,245—roughly 26% above its level at the start of the year. It has more than doubled from the 52-week low of €584. On Friday, the shares closed at €1,240.80. Several Wall Street banks have raised their price targets following the quarterly results, with RBC Capital now targeting €1,700. Both Deutsche Bank and Goldman Sachs maintain buy ratings.

A Dividend Boost and Internal Restructuring

Shareholders received a tangible reward this week. ASML’s annual general meeting on April 22 approved a final dividend of €2.70 per share for 2025, bringing the total payout for the year to €7.50—a 17% increase from the prior year. The stock went ex-dividend today, with payment scheduled for May 5.

Internally, the company is reshaping its workforce. Around 1,700 positions—mostly in middle management—are being eliminated, while 1,400 new engineers are being hired to meet growing demand for semiconductor manufacturing equipment.

The Diplomatic Clock Is Ticking

The committee vote is not yet law. The MATCH Act must still pass the full House and Senate. ASML CEO Christophe Fouquet has already met with US Commerce Secretary Howard Lutnick, signalling that diplomatic channels remain active. Whether that engagement is enough to defuse the threat will become clear within the next 150 days. For now, ASML’s investors are betting that the company’s technological indispensability will outweigh the political noise—but the margin for error is narrowing.