Geopolitical pressures could limit ASML’s growth.
Cyclicality in the chip market and customer concentration remain real concerns.
ASML’s ability to keep advancing chipmaking technology will be key to its performance over the next decade.
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ASML Holding (NASDAQ: ASML) has become one of the most important — and profitable — companies in the world. Its extreme ultraviolet (EUV) lithography machines are essential equipment for manufacturing today’s most advanced semiconductors — chips widely used in artificial intelligence (AI) processors, smartphones, and data centers, among other applications. Its stock has soared as investors bet on the company’s technological monopoly position and the structural growth of the AI industry.
But even a world-class business like ASML isn’t immune to risk. As its machines become more expensive and geopolitical tensions intensify, investors must consider how durable ASML’s dominance really is. Here are three key risks long-term investors should watch.
Image source: Getty Images.
ASML sits at the center of a global supply chain — and that position comes with political baggage. The company relies on suppliers in Japan, the U.S., and Europe, while selling to major customers like Taiwan Semiconductor Manufacturing, Samsung, and Intel.
However, export restrictions have limited ASML’s ability to ship its most advanced EUV and deep ultraviolet (DUV) systems to China. The Dutch government, under U.S. pressure, has already tightened those export controls multiple times since 2019. In early 2024, ASML confirmed that it had to cancel some shipments bound for China due to new rules.
The company expects China-based customers to account for slightly more than 25% of its sales in 2025, which is significant considering that China is also one of the fastest-growing semiconductor markets globally. Losing access to this customer base could reduce its near-term revenue growth and limit its long-term growth potential.
Moreover, China is investing heavily to develop its…
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