ASML, the renowned Dutch semiconductor giant, is feeling the heat from the escalating US-China tech rivalry. Recent US-imposed restrictions on exporting high-end lithography machines and other critical equipment have significantly impacted ASML's operations in the Chinese mainland.
Once a cornerstone of ASML's global sales, the Chinese market accounted for nearly half of the company's revenue. However, in the third quarter of 2024, orders from China plummeted sharply due to these restrictions. Projections indicate that by 2025, revenue from the Chinese market will drop to approximately 20%, leading to a near 16% year-on-year decline in net profits.
The financial strain is evident as ASML's stock price has experienced its largest drop in 26 years. Christophe Fouquet, ASML's CEO, has voiced strong concerns, highlighting that the US restrictions not only harm the company's economic interests but also risk triggering greater backlash. He emphasized the intertwined nature of the global semiconductor supply chain, stressing that attempts to decouple are both costly and counterproductive to economic growth.
In response, ASML is actively engaging with US authorities to negotiate the scope and impact of the export controls, striving to maintain business autonomy while honoring contractual agreements.
The ripple effects of the US restrictions extend beyond ASML. European tech companies are witnessing a reduction in market share, decreased revenues, and constrained investment capabilities. This downturn is forcing many to slash research and development budgets, hindering innovation and slowing technological advancements.
To combat these challenges, countries like Germany, France, and Sweden are launching domestic initiatives aimed at supporting startups in key sectors. Collaborative projects are underway to diminish reliance on US tech firms, fostering greater technological sovereignty across Europe.
European governments are also implementing a mix of policy initiatives, funding programs, and strategic alliances to counteract the "America First" policies. Regulatory measures such as the Digital Markets Act and the Digital Services Act are being introduced to curb the dominance of US tech giants like Google, Amazon, and Apple, creating a more level playing field for European companies.
The "America First" approach, characterized by tariffs, trade restrictions, and a focus on domestic procurement, prioritizes US economic growth but poses significant hurdles for international collaboration. These policies may limit opportunities for joint research and development, increase operational costs for European firms in the US market, and isolate European companies in critical innovation sectors.
As the tech landscape evolves under the influence of geopolitical tensions, European technology companies must navigate these complexities to sustain growth and innovation. The ongoing adjustments reflect a broader shift towards building self-reliant ecosystems that can thrive independently of dominant foreign powers.
Reference(s):
Dutch firm ASML becomes 'hostage' in China-US tech competition
cgtn.com
