ASML's Hold Over the Future of Chipmaking Is Weakening as China Closes the Gap

ASML's monopoly on the most advanced chipmaking equipment is not at imminent risk, but China is edging ever closer to domestic alternatives that could matter over the next decade, the Financial Times reported on August 3. The Dutch lithography giant still controls 100% of the EUV market, but its lead in adjacent technologies is narrowing.

What's Changing

Chinese equipment makers - most prominently Naura and AMEC - have made steady progress on deposition, etch, and inspection tools that complement ASML's lithography machines. The progress is most visible in mature nodes, where Chinese fabs are now mostly self-sufficient. At the leading edge, ASML still has no peer, but Chinese customers are increasingly sourcing from multiple vendors and building redundancy into their roadmaps.

"ASML's monopoly is not at imminent risk but China is edging ever closer," the FT wrote.

Why It Matters

ASML's pricing power rests on the assumption that no other vendor can build EUV-class tools at scale. That assumption still holds, but the addressable market for non-EUV tools - where Chinese vendors are increasingly competitive - is large and growing. ASML's revenue mix is shifting toward EUV and High-NA EUV, but mature-node demand still accounts for a meaningful slice of the order book, and that slice is the most exposed to Chinese substitution.

The Geopolitics

The shift comes against a backdrop of tightening US export controls. ASML has not been allowed to ship its most advanced EUV tools to China since 2023, and several DUV tools were added to the restriction list in 2024. The restrictions have accelerated Chinese investment in domestic alternatives, with state-backed funding flowing into Naura, AMEC, and a handful of newer entrants. The FT piece argues that the long-term effect of export controls has been to push China closer to self-sufficiency, not farther from it.