ASML’s Rally Faces a China Service Ban Threat While a Labor Pact Eases Internal Tensions

Dutch chip-equipment giant ASML rides AI demand to near all-time highs, but a potential ban on servicing DUV machines in China threatens 20% of revenue; labor dispute resolved, analysts bullish.

The Dutch chip-equipment titan ASML finds itself caught between two sharply different forces. On one hand, the stock has roared to within striking distance of an all-time high, powered by insatiable AI demand and a dominant position in lithography. On the other, a potential halt to servicing DUV machines already installed in Chinese chip plants threatens to carve out a significant chunk of revenue. That tension has done little to cool the rally so far, but the July second-quarter report could change the narrative.

At the centre of the China risk is a tightening of export rules by the Dutch government, driven in part by diplomatic pressure linked to the U.S. "Match Act." Dutch Trade Minister Sjoerd Sjoerdsma has sharply criticised the sweeping American legislation, warning that it erodes investment certainty for European technology companies. For ASML, the stakes are immediate: China accounts for roughly 20% of expected total revenue, and a formal servicing ban on older DUV tools would cut directly into a stable income stream.

Meanwhile, the company has resolved a very different kind of confrontation closer to home. After a strike by more than 1,000 workers at its Veldhoven headquarters in March, management has reached a compromise with unions on planned job cuts. The original target of cutting around 4% of the global workforce — with 1,400 positions earmarked in the Netherlands alone — has been scaled back sharply. According to a company spokesperson, fewer than 1,000 jobs will ultimately be eliminated. More importantly, the agreement rules out operational dismissals until May 2027, giving the company time to focus on internal transfers and retraining programmes.

That labour peace gives ASML’s management a degree of planning stability that complements its already bulging order book. Analysts on both sides of the Atlantic are taking note. Goldman Sachs has reiterated its buy rating and pushed its price target up to €1,770. BofA Securities is looking further ahead, forecasting that ASML could generate €73 billion in revenue by 2030 — well above the company’s own projections — with gross margins potentially exceeding 60%. Only Morningstar stands apart, currently rating the shares a sell.

The financial results so far this year support the fundamental optimism. In the first quarter, ASML booked €8.8 billion in revenue and raised its full-year guidance. Management now expects annual sales of up to €40 billion. Net profit for the first three months came in at €2.8 billion. The stock closed last week at €1,614.80, putting it just under the recent record high of €1,644 and leaving it up more than 63% since the start of January.

Technology continues to strengthen ASML’s monopoly. CEO Christophe Fouquet has confirmed that the first chips from the new High-NA EUV machines — each costing around $400 million — will be delivered in the coming months. Big customers such as Intel and SK Hynix are pushing ahead with the cutting-edge systems, even though some other chipmakers remain cautious on cost. ASML plans to ship more than 60 EUV systems this year alone.

To keep up with that demand, the company is expanding its physical footprint. Construction of the first phase of the Brainport Industries Campus in Eindhoven is set to begin in the third quarter of 2026. Morgan Stanley has warned that this initial block will not be enough and must serve as the launchpad for a multi-phase expansion, hinting at the scale of the production ramp ASML needs to sustain.

All eyes now turn to July, when ASML releases its second-quarter numbers. Analysts expect management to provide concrete details on the financial impact of the potential China servicing ban. If a meaningful slice of service revenue disappears, the stock’s elevated valuation — reflected in a high relative strength index — could come under pressure. For now, the rally holds, but the political clouds are gathering.