ASML Just Got Hit by a New China Export Threat. Is This a Buying Opportunity or a Red Flag?

Earlier this month, a bipartisan group of U.S. lawmakers introduced legislation that landed on ASML Holding's (NASDAQ: ASML) balance sheet like a stone. The bill, formally titled the Multilateral Alignment of Technology Controls on Hardware Act -- or the MATCH Act -- isn't just another round of export restrictions. It's qualitatively different from what came before, and ASML investors should understand why.

Previous rounds of U.S. export controls targeted ASML's most advanced technology: extreme ultraviolet (EUV) lithography machines, which can cost upward of $400 million each and represent the absolute frontier of chip manufacturing. The Dutch company has never shipped an EUV machine to China, and the Netherlands has cooperated with restrictions since 2023.

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The MATCH Act closes the remaining loophole: It would ban the export of deep ultraviolet (DUV) immersion lithography systems -- the older-generation machines that Chinese chipmakers have been using to manufacture less advanced semiconductors.

More crucially, the bill would also ban the servicing of existing equipment in China. This is the part of the legislation that gets less attention but matters more.

Chipmaking equipment is not static. It requires constant calibration, spare parts, software updates, and field support. Without it, even machines already installed in China will gradually degrade. The MATCH Act doesn't just close the door; it also effectively starts a countdown on the usefulness of existing Chinese semiconductor capacity.

The numbers make this a serious issue

China was ASML's largest single market in 2025, representing 33% of total revenue. In the 2025 fourth quarter alone, that figure was 36%. The company had already anticipated some compression, guiding investors to expect China to account for about 20% of total sales in 2026, reflecting restrictions already in place.

But that guidance predates the MATCH Act. If the bill passes, the 20% figure could shrink further. And more importantly, ASML's revenue from servicing previously installed equipment in China -- which has been a key growth driver -- would be at risk.

The company reported €32.7 billion ($38.5 billion) in total revenue for 2025, with guidance for 2026 between $40 billion and $46 billion. A forced reduction in business from China doesn't necessarily break that guidance range, but it compresses the upside.

Is this a buying opportunity?

I think the honest answer is: It depends on your time horizon, and the fact that the bill isn't law yet. The MATCH Act still needs to pass both chambers of Congress and receive a presidential signature.

It also contains a 150-day window for allies -- specifically the Netherlands and Japan -- to demonstrate their own tightening of export controls before Washington acts unilaterally. That diplomatic track matters. The Netherlands has historically cooperated with U.S. semiconductor policy, but not always instantly or completely.

Beyond the legislative uncertainty, ASML's long-term thesis has not changed. The company holds a near-monopoly on EUV lithography, and there is no credible domestic Chinese alternative to EUV -- most analysts estimate China is at least a decade away from independent EUV capability.

Global demand for advanced chips, from Intel and others, is structurally growing. ASML's 2030 revenue projections of $51.9 billion to $70.7 billion remain in place and are built on global wafer demand, not any specific geographic split.

For a long-term investor, ASML at a meaningful discount to those scenarios is a different conversation than it was a year ago. The company's installed-base business grew 26% in 2025, driven by service upgrades of existing machines outside China. That business is durable and geographically diversified.

Here's the part I wouldn't wave away: The direction of travel for the Chinese revenue is now clearly toward zero.

Each round of restrictions lowers the ceiling further. Investors who bought ASML on the thesis that its business in China would stabilize at 20% of revenue may need to revise that assumption downward, and potentially again after that.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Intel. The Motley Fool has a disclosure policy.