ASML's latest earnings call reveals that China continues to account for approximately 20% of its total net sales, primarily driven by demand for Deep Ultraviolet (DUV) systems. This indicates that while advanced Extreme Ultraviolet (EUV) systems are restricted, China's push for domestic chip production maintains significant demand for mature-node semiconductor equipment, redirecting rather than eliminating its spending.
ASML's disclosure that China still constitutes 20% of its revenue is significant because it highlights the nuanced impact of the 'chip war.' While U.S. export controls have successfully blocked China's access to ASML's most advanced EUV systems, China has shifted its spending towards DUV systems for mature-node chip production. This maintains a substantial revenue stream for ASML, demonstrating the resilience of China's demand for semiconductor equipment and the difficulty in fully 'untangling' the global supply chain. For traders, this implies that ASML's revenue stream is more diversified than some might assume, with continued demand from China offsetting some of the geopolitical risks, though future export restrictions remain a key long-term uncertainty.