ASML Shares Dip as Chinese Revenue Forecasts Are Revised

ASML shares fell over 4% as China revenue is set to normalize, but the firm highlights AI demand and major High-NA EUV lithography progress for future growth.

Shares of ASML Holding NV, the Dutch company that dominates the global market for semiconductor manufacturing equipment, fell sharply in trading on Thursday. The stock declined more than 4% at one point during the session. This pullback was driven by the company's updated guidance, which indicates a contracting revenue contribution from China throughout this year.

Technological Milestones and Long-Term AI Demand

Despite the near-term headwinds, ASML's strategic outlook remains focused on long-term drivers. In its 2025 annual report, published on February 24, the firm placed artificial intelligence squarely at the center of its sustained demand narrative. The AI revolution is expected to fuel robust growth for the company over multiple years.

Concurrently, ASML announced critical progress in its technology roadmap. The next generation of its High-NA extreme ultraviolet lithography systems is now ready for volume manufacturing. These machines are essential for producing the more powerful chips required for advanced AI applications and high-performance computing. A senior company executive described this advancement as a significant step forward for the entire chipmaking industry.

Furthermore, a breakthrough has been achieved with the EUV light source. By reaching a power level of 1,000 watts, the processing speed for wafers could be increased by up to 50% by the end of this decade. This underscores ASML's pivotal role in pushing the boundaries of modern semiconductor fabrication.

Chinese Market Contribution Set to Normalize

Management at the semiconductor equipment provider has provided more concrete expectations for its Chinese business, delivering a more sober assessment than some investors had hoped for. By 2026, ASML anticipates that China will account for only approximately 20% of its total sales. This marks a noticeable decrease from 2025, a year in which the company is still benefiting from working through a substantial order backlog established before stricter export controls took full effect.

This normalization of business in China is forcing investors to recalibrate their short-term growth assumptions. The market reaction also reflected profit-taking activity, as some participants seized the opportunity following a strong run in the share price heading into 2026.

The current share price weakness reflects this near-term recalibration, while the company's technological achievements lay a foundation for future expansion. Investors are now weighing the pace at which burgeoning AI-related demand can offset the anticipated softening of the China segment.