ASML Faces a Fresh Threat Out of China. Is the Dip in the Stock Worth Buying?

ASML's stock declined following reports that a Chinese government-backed firm is producing domestic deep ultraviolet (DUV) lithography systems, potentially eroding the Dutch chipmaker's foothold in the world's second-largest semiconductor market. ASML's China revenue has already contracted from 41% of total sales to 16% due to export restrictions on advanced chipmaking equipment.

The threat centers on DUV technology, used for older-generation chips. China remains shut out from ASML's extreme ultraviolet (EUV) systems—the cutting-edge machines required for manufacturing high-end AI chips. ASML's EUV sales are accelerating outside China as demand for AI semiconductor capacity intensifies, offering a revenue offset to declining Chinese business.

The Motley Fool characterized the pullback as a buying opportunity for long-term holders, arguing that EUV growth in AI-chip production will outweigh DUV losses in China. The company's monopoly on EUV lithography remains intact despite the Chinese competitive development.