ASML’s €8.8bn Quarter Hides a Washington Time Bomb and a TSMC Cold Shoulder

ASML beat Q1 estimates but faces headwinds from a US bill targeting China sales and TSMC's delay of high-NA EUV machines until 2029.

The Dutch semiconductor equipment giant delivered a first-quarter earnings beat that masked two gathering storms: a bipartisan US bill targeting its remaining China business and a key customer’s decision to delay adoption of its most advanced machines.

The MATCH Act: A 150-Day Ultimatum

Washington’s latest salvo targets the last slice of ASML’s China revenue still untouched by export controls. The bipartisan MATCH Act, introduced in the US Congress, would ban sales of older DUV lithography systems to China — and, more painfully, prohibit servicing of machines already installed there.

The legislation gives the Netherlands and Japan 150 days to align their own export rules. If they fail, the US can unilaterally extend restrictions to ASML’s Veldhoven-made equipment. The bill must still clear both chambers, and it remains unclear whether it covers all DUV systems or only immersion models.

For ASML, the stakes are high. China accounted for 36% of system sales in the fourth quarter but slumped to just 19% in the first three months of 2026. Management already expects that share to normalise to around 20% for the full year. Analyst Michael Roeg at Degroof Petercam estimates the MATCH Act could shave a low-single-digit percentage off revenue. JPMorgan’s Sandeep Deshpande sees a potential 10% hit to earnings per share, even as other regions pick up the slack.

South Korea Steps In as TSMC Steps Back

The gap left by China is being filled by South Korea. Memory chipmakers there are racing to expand capacity for AI workloads, and Korean customers now account for nearly half of total sales.

But a second headache emerged from Taiwan. TSMC, ASML’s biggest customer, has pushed back adoption of the new high-NA EUV machines until at least 2029. Each unit costs over €350 million, and ASML had expected volume production to begin by 2027. Bernstein analysts shrugged off the delay, noting TSMC had signalled this timeline a year ago. Intel is already using the technology for development, and Samsung plans to install a second machine in the first half of 2026.

Strong Q1, Cautious Q2

The first-quarter numbers themselves were robust. Net revenue hit €8.8bn, comfortably above the €8.5bn consensus, while net profit of €2.8bn also beat expectations. ASML raised its full-year revenue guidance to a range of €36bn to €40bn and plans to ship more than 60 EUV units this year, up from 48 last year.

Yet the second-quarter outlook gave investors pause. Management guided for revenue of €8.7bn, well below the €10.6bn analysts had pencilled in. Notably, ASML omitted its customary order intake figure — a metric the market watches closely.

The shares fell about 3% on the day to €1,186, roughly 8% below February’s 52-week high. Even so, the stock has gained 20% since the start of the year.

Analysts Stay Bullish Despite Headwinds

The analyst community remains largely upbeat. Of 45 analysts covering the stock, 82% rate it a buy, with a median price target equivalent to around $1,775. RBC Capital lifted its target to €1,700 in mid-April, citing sustained demand for EUV systems. Wells Fargo recently raised its target to $1,750, pointing to strong demand outside China.

ASML’s order backlog stands at nearly €39bn, and the company is ploughing investment into new factories. A multi-billion-euro share buyback programme runs through 2028. CFO Roger Dassen expects to ship at least 60 low-NA EUV systems this year and around 80 next year.

The near-term path hinges on two unknowns: whether the MATCH Act becomes law in its current form, and how much of the China shortfall South Korea can absorb. A Dutch vote on its own export controls is also pending. For now, ASML’s core business is firing on all cylinders — but the political calendar is closing in.