ASML rebounds after analysts call China rival sell-off overdone

ASML ↘ 0.19% shares climbed approximately 6.8% on Thursday, July 30, recovering a portion of the more than €60 billion in market value wiped out during a two-day selloff earlier in the week. The rebound came as Wall Street analysts pushed back against what they characterized as an overreaction to reports of a Chinese state-backed firm manufacturing domestic lithography equipment.

The Selloff and Its Trigger

The turbulence began on Monday, July 27, when The Information first reported that China had begun manufacturing domestically developed immersion deep-ultraviolet lithography machines. Reuters Thomson Reuters Corporation ↗ 2.92% confirmed the following day that Shanghai Aishengna Electronic Technology Group, a state-owned enterprise, was leading the production effort after incorporating teams from top Chinese lithography startups. ASML shares fell nearly 6% on Monday and another roughly 5% on Tuesday, dragging the Philadelphia Semiconductor Index PHLX Semiconductor Index ↘ 1.19% down more than 5% and pressuring Nvidia ↘ 1.47% and other chip stocks.ad-hoc-news+2

China plans to manufacture just five immersion DUV machines this year and approximately 20 in 2027. By contrast, ASML shipped 131 such systems in 2025 and is targeting around 130 this year with a 30% capacity expansion planned for 2027.businessinsider+2

Analysts Call It Overdone

Bank of America labeled the selloff an overreaction, while JPMorgan cautioned against equating a handful of assembled DUV tools with genuine mass-production capability. Reuters Breakingviews noted that while the Chinese machines represent a step forward, they are not as technically advanced as ASML's competing models. Bloomberg Intelligence estimated China's technological gap in the more demanding EUV lithography at seven to ten years.reuters+1

Even if Aishengna hits its 2027 target of 20 machines, analysts calculate the revenue impact at roughly €1.4 billion — about 2.4% of ASML's projected group sales. China accounted for 29% of ASML's 2025 revenue, or approximately €9.5 billion, entirely through DUV machines and services.ad-hoc-news+1

Geopolitical Pressure Persists

The episode underscored how ASML remains caught between U.S. export controls and Beijing's push for self-sufficiency. Sanne van der Lugt, a researcher affiliated with the Netherlands' Leiden Asia Center, told Reuters that tighter rules had inadvertently "created a business case for Chinese lithography". Meanwhile, U.S. Commerce Secretary Howard Lutnick publicly questioned this week whether ASML's EUV machines had reached China — an allegation the company denied. Whether Thursday's bounce marks a sustainable recovery or a technical reprieve depends on the actual performance of China's new machines and the trajectory of U.S. export policy.communicationstoday+1