Dutch company warns of semiconductor supply chain strain amid geopolitical pressures

ASML, a Dutch semiconductor equipment maker, holds a dominant position in the global market, supplying over 90% of machines for semiconductor production, from cutting-edge AI chips to those in everyday products like cars and washing machines. However, despite its industry leadership, ASML is encountering significant challenges.

The U.S. has imposed restrictions on the company's most advanced equipment, preventing sales to China as part of efforts to curb China's AI ambitions. At the same time, demand for ASML's less advanced machines has weakened, forcing the company to revise its 2025 sales forecast, leading to a 20% drop in its stock price, Caliber.Az reports via foreign media.

The company’s state-of-the-art extreme-ultraviolet (EUV) machines, which cost over $350 million each and are essential for producing next-gen AI chips, have seen mixed reactions. While these tools promise exceptional precision, some chipmakers believe older machines can produce similar results, albeit with more complex processes. Additionally, the market for these advanced tools is limited, with only a few companies having the expertise and capital to adopt them. Despite this, ASML's CEO, Christophe Fouquet, remains optimistic, expecting AI advancements to drive demand for EUV machines in the long term.

However, Fouquet’s concerns are not solely focused on the market. Geopolitical tensions, particularly with the U.S. and China, are affecting ASML’s operations. In 2019, under pressure from the U.S., the Dutch government blocked ASML from exporting its most advanced EUV machines to China. This move, which was followed by additional export restrictions, has created uncertainty for ASML, with potential further restrictions under the Biden administration.

Fouquet has expressed frustration with European policymakers, urging them to provide more support for ASML, which he believes is crucial for Europe’s strategic interests. ASML is Europe’s only company with a near-monopoly in a critical sector, yet Fouquet believes that European governments have been too quick to follow the U.S. in imposing restrictions. He argues that Europe must assert more control over its own economic future and should not be dictated to by external forces.

While ASML is unlikely to leave Europe due to its tightly integrated supply chain, Fouquet warns that continued governmental interference could damage the delicate "chain of trust" in the semiconductor industry, which has been built on deep collaboration. Despite these challenges, ASML's future remains intricately tied to both technological advances and the political climate.

By Vugar Khalilov