ASML's DUV-Driven China Breakthrough Underscores Demand Resilience as Analysts Push Targets Higher

SMIC's Kirin-9030 matches TSMC N6 density using DUV tools despite export curbs; ASML stock surges 64% on AI demand and raised guidance.

A fresh teardown analysis has put the spotlight back on how effectively export controls are curbing China's semiconductor ambitions — and the findings are uncomfortable for policymakers. SemiAnalysis reported in mid-June 2026 that SMIC had fabricated Huawei’s Kirin-9030 processor using a minimum metal pitch of just 32.5 nanometres, roughly 10% tighter than Intel’s current 18A node. What makes the feat striking is that it was achieved not with ASML’s cutting-edge EUV machines but with older DUV immersion systems, albeit combined with complex multi-patterning techniques. The conclusion: export restrictions have made China’s chip development more expensive and circuitous, but they have not stopped it entirely. SMIC’s N+3 process now matches the transistor density of TSMC’s N6 node, though at the cost of higher complexity and potentially lower yields.

Yet that headwind has done little to dim the enthusiasm surrounding ASML’s order book. Analysts have been lining up to raise price targets amid a blistering run that has lifted the stock 64% since the start of the year. Citi recently lifted its target from €1,600 to €1,675 and reiterated its buy rating, bumping up its 2026 and 2027 revenue forecasts by 4% and 3% respectively. Bank of America went further with a €1,921 target, while both Barclays and JPMorgan set theirs at €1,900. Sanford C. Bernstein, which confirmed its buy recommendation on 25 May with a €1,700 target, described ASML as the primary beneficiary of AI-driven demand for advanced chips.

The catalyst for the upgrades is a strong first quarter. ASML booked Q1 revenue of €8.8 billion and raised its full-year net sales outlook to between €36 billion and €40 billion. Gross margin landed at 53.0%, up from 51.6% in the third quarter of 2025, driven particularly by a booming memory segment where DRAM demand is running hot. For the second quarter, management expects revenue in a range of €8.4 billion to €9.0 billion and a gross margin between 51% and 52% — a slight normalisation in product mix after an unusually favourable composition in Q1.

China’s share of ASML’s revenue is expected to fall to roughly 20% this year, down from previous levels, largely because the company now needs separate licences to service and supply spare parts for DUV tools already installed in the country. CEO Christophe Fouquet, who raised the annual forecast in April, said the wide €4 billion revenue band leaves enough room for various outcomes from ongoing export-control discussions. Meanwhile, demand elsewhere is surging: memory customers are booked solid well into 2027, fuelled by AI infrastructure investments, and ASML has already begun scaling production capacity for both EUV and non-EUV systems for that year.

The next major test will be the commercial rollout of ASML’s high-NA EUV lithography tools, with the first deliveries due in the coming months. Success there would reinforce the technological moat that competitors like SMIC are trying to circumvent with older gear. For now, the stock sits at €1,623.80, less than 3% below its 52-week high from 15 June, though the valuation — a trailing price-to-earnings ratio of roughly 62 — gives some investors pause. The technicals are stretched: the stock trades about 23% above its 50-day moving average and the RSI stands at 69. With Q2 results due before the market opens on 15 July, the next data point will test whether the current momentum can hold despite export restrictions and geopolitical uncertainty.