China’s Semiconductor Ambitions Face the Immovable Force of ASML

A clarion call has been issued by China’s top semiconductor executives. In a unified appeal to the government, they have urged a full-scale national mobilization of resources with a singular goal: to build a domestic lithography industry capable of rendering the Dutch technology leader, ASML, obsolete by 2030. Their message is stark, advising the abandonment of “illusions” and preparation for a protracted struggle. This declaration of technological independence, however, collides with a formidable reality defined by ASML’s deep-rooted dominance and staggering executional complexity.

A Gaping Technological Chasm

The scale of China’s challenge cannot be overstated. The nation’s most advanced deep ultraviolet (DUV) lithography system, produced by Yuliangsheng, is technically comparable to ASML’s Twinscan NXT:1950i—a machine the Dutch firm developed back in 2008 for 32-nanometer chip production. This places China’s capabilities nearly two decades behind ASML’s current extreme ultraviolet (EUV) technology, which is essential for manufacturing cutting-edge semiconductors with features smaller than 7 nanometers.

Chinese industry leaders themselves concede that their domestic sector remains “too small, fragmented, and weak.” While acknowledging progress on individual components like EUV light sources and optical systems, they identify the integration of these parts into a fully functional machine as the paramount hurdle. ASML’s operation is a testament to this complexity, coordinating a network of over 5,000 suppliers to source approximately 100,000 components for a single EUV system—an ecosystem that cannot be replicated in a matter of a few years.

Unmatched Financial and Technological Execution

As strategic plans are drafted in Beijing, ASML continues to deliver record-breaking financial and technological results. The company’s 2025 fiscal year saw revenue climb 15.6% to a new high of €32.7 billion. Its gross profit margin stood at a robust 52.8%, with net profit reaching €9.6 billion. The fourth quarter alone witnessed orders worth €13.2 billion, of which €7.4 billion were for its pivotal EUV systems.

A towering order backlog of €38.8 billion at year-end underscores persistent demand. Technologically, ASML has begun shipments of its first fully specified High-NA EUV system, the TWINSCAN EXE:5200B, the culmination of nearly a decade of development. This next-generation technology, enabling even finer chip circuitry, extends the company’s lead further.

Should investors sell immediately? Or is it worth buying ASML?

Looking ahead to 2026, management projects revenue between €34 billion and €39 billion, with a gross margin forecast of 51% to 53%. Shareholders will also benefit from a 17% increase in the dividend for 2025, set at €7.50 per share.

A Shifting, Yet Manageable, China Exposure

A notable shift is anticipated in ASML’s geographic revenue mix. Following an exceptionally high contribution from China in 2025—partly driven by orders completed before stricter export controls took full effect—the region is expected to account for only about 20% of total sales in 2026. This anticipated normalization briefly pressured the company’s share price at the start of the week.

Demand from other regions is poised to fill the gap. Key customer Taiwan Semiconductor Manufacturing Company (TSMC) has outlined plans for a significant expansion of its EUV capacity. This momentum has already prompted market analysts to raise their forecasts for ASML’s 2026 and 2027 performance, citing expectations for higher unit volumes and a more valuable product mix.

An Unassailable Position—For the Foreseeable Future

ASML’s structural competitive advantage remains unchallenged. It is the sole global provider of EUV lithography machines, without which advanced semiconductor manufacturing simply cannot proceed. This monopoly is built upon decades of manufacturing expertise and a supplier network of unparalleled intricacy.

Paradoxically, China’s aggressive push for self-sufficiency only serves to highlight this dominance. The louder the calls for independence from Beijing, the more evident the substantial gap becomes. Under these circumstances, establishing a credible competitor by the 2030 deadline appears highly unrealistic. ASML’s status as one of the semiconductor industry’s most strategically vital companies is not only secure but is being emphatically validated by the very frustration it generates in geopolitical rivals.