ASML Beats Order Estimates but Warns of Sharp China Slowdown

ASML (ASML, Financials), the world's largest supplier of chipmaking equipment, posted stronger-than-expected orders in the third quarter, driven by global demand for artificial intelligence chips. But the company cautioned that sales to China will drop significantly next year.

CEO Christophe Fouquet said AI-related investments continued to fuel demand for ASML's lithography tools, which are used to produce advanced logic and memory chips. The company's key customers include TSMC, Intel, and Samsung, which manufacture processors for AI data centers and smartphones.

Even with strong global demand, ASML said sales from China are expected to fall significantly next year. The region accounted for nearly half of total revenue in 2024 and about one-third so far this year. CFO Roger Dassen described the expected pullback as a normalization rather than a sign of stockpiling or weakening demand.

U.S.-led export restrictions continue to limit ASML's ability to sell its most advanced equipment in China. The company said those controls are unlikely to affect its short-term operations but acknowledged they will weigh on 2026 sales, which it expects to be roughly flat from this year's projected 32.5 billion.

Analysts at JPMorgan said investor concerns about a deeper slowdown appear overblown and expect the market's focus to shift toward ASML's growth prospects in 2027 as AI-related chip investments expand.