The Dutch government has reportedly imposed new restrictions on ASML’s (AS:) ability to maintain and supply spare parts for its advanced deep ultraviolet (DUV) equipment in China. However, analysts from JPMorgan and Wells Fargo suggest the impact on ASML’s overall earnings could be limited.
The Dutch government is preparing to block ASML from renewing some licenses required to service advanced DUV tools in China, likely due to pressure from the U.S. government, JPMorgan said in a note on Friday.
The United States had previously indicated it might impose tougher rules on foreign direct products on partner countries, including the Netherlands, to limit China’s access to advanced semiconductor technology.
JPMorgan analysts believe that while the restrictions will affect tools already shipped to China, they do not expect this to prevent ASML from servicing its existing tools in the country.
“We believe that if the current set of restrictions were limited to servicing advanced DUV tools in China only, the impact on ASML’s 2025 revenue would be -1%,” the bank wrote. “However, since tool servicing/installed base management is a higher-profit business, the impact on the company’s 2025 gross margins would be -1.25%+ in our view.”
Wells Fargo analysts offer a similar view, noting that while there are conflicting reports on the extent of these restrictions, they don’t view the development as a major surprise.
“We estimate limited impact on revenue with total domestic services revenue in China at 10% of total services (2% of total revenue),” Wells Fargo says.
“We see these restrictions as likely to affect a small fraction of that 10 percent,” they added.
Both JPMorgan Chase and Wells Fargo note that while the Dutch government’s tougher stance on China may have some impact on ASML, it is not expected to be significant enough to radically change the company’s financial outlook.