ASML’s Market Momentum Meets Emerging Chinese Competition

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While ASML's shares trade near record highs on strong institutional backing, reports of a breakthrough in Chinese semiconductor manufacturing technology introduce a new strategic challenge. The Dutch firm's technological dominance in advanced chipmaking equipment now faces a potential long-term rival, reportedly developed with assistance from former ASML engineers.

ASML's financial performance remains solid. For the third quarter of 2025, the company reported earnings per share of $6.41, surpassing market expectations. Quarterly revenue reached $8.80 billion, and the board approved an increased dividend payment of $1.857 per share.

This strong operational backdrop has attracted significant institutional investment. Recent regulatory filings reveal major asset managers are expanding their holdings. Exchange Traded Concepts LLC boosted its position by 30.1% in Q3 2025, while Amundi's stake grew by a substantial 91.6%. Collectively, institutional investors now control 26.07% of the company's shares. These purchases are occurring even with a demanding valuation, as the stock trades at a price-to-earnings ratio of approximately 40, underscoring investor confidence in ASML's near-monopoly on cutting-edge lithography systems.

The Chinese EUV Ambition

A Reuters report has drawn market attention to developments in China, where researchers have allegedly assembled a working prototype of an extreme ultraviolet (EUV) lithography machine. Described as a "Manhattan Project" for the nation's semiconductor sector, the prototype is said to be larger and less refined than ASML's industry-leading systems. Crucially, however, it is reported to already generate the necessary extreme ultraviolet light required for producing advanced semiconductors.

A particularly sensitive detail is the alleged involvement of former ASML engineering staff in the project. This development aligns with China's stated goal of achieving self-sufficiency in chip production by 2030—a timeline considered more ambitious than projections from ASML's own CEO, Christophe Fouquet.

Valuation and Competitive Horizon

Following an advance of roughly 30% since the start of the year, ASML's share price currently hovers around €900. The average analyst price target of $1,065 suggests limited near-term upside from current levels. The central question for long-term investors is no longer just about cyclical demand but about the durability of ASML's technological edge. The emerging scenario pits the company's deep expertise and innovation pipeline against a state-funded competitor with a clear strategic mandate. The market is now weighing robust current financials and institutional support against the future risks of a fragmenting global supply chain and intensified technological competition.