ASML and Besi Plunge Nearly 10%; Trading Temporarily Halted

ASML and Besi shares came under heavy pressure on Monday after reports emerged of a Chinese breakthrough in the field of chip manufacturing equipment.

ASML shares fell nearly 9 percent at their lowest point, after which trading on Euronext was temporarily halted automatically due to the sharp price fluctuations. Besi also experienced a so-called volatility pause following a sharp decline.

Investors are reacting to reports that China has begun producing its own immersion DUV lithography machines, a market in which ASML has been virtually unchallenged for years.

The news comes from the technology website The Information, which cites two anonymous sources. According to the report, the Chinese startup Shanghai Yuliansheng Technology has begun manufacturing immersion DUV lithography machines. This type of chip machine is used for the production of advanced chips and, unlike the more modern EUV machines, may still be supplied to China by ASML.

Shanghai Yuliansheng reportedly aims to produce five DUV machines this year and about twenty next year. The first systems are expected to be delivered to major Chinese chip manufacturers, including Semiconductor Manufacturing International (SMIC), Hua Hong Semiconductor, and memory chip maker ChangXin Memory Technologies (CXMT).

If these machines do indeed enter mass production successfully, it could gradually reduce Chinese chip companies’ dependence on ASML.

Following the news, selling pressure mounted rapidly. ASML completely erased an earlier gain of more than two percent and lost nearly nine percent at its low point. Due to the exceptionally sharp price movement, trading on Euronext was temporarily halted automatically via a so-called volatility pause.

Toward the end of the trading day, the stock was still down more than seven percent. Other companies in the sector also took significant hits. ASMI lost more than four percent, while Besi fell more than seven percent and was also briefly halted.

According to analysts at Jefferies, the news may indicate that China is making progress with its own chip manufacturing equipment. In the long term, this could have a negative impact on ASML’s outlook in China.

At the same time, the analysts offer an important caveat. In the past, there have been frequent reports about Chinese alternatives to ASML machines that later turned out to be inaccurate or greatly exaggerated. It therefore remains to be seen whether production will actually get off the ground on a large scale.

In addition, Jefferies emphasizes that Chinese chipmakers will likely continue to purchase ASML machines as long as possible. The Dutch systems are still considered to be of significantly higher quality than the Chinese alternatives.

These developments show that China continues to make significant strides in building its own chip industry. Due to export restrictions from the United States and Europe, the country has been investing heavily for years in domestic alternatives to Western technology.

However, analysts also have some reservations. The Chinese DUV machines are based on older technology and have yet to prove themselves in practice. According to reports, approximately five systems will be produced this year, rising to about twenty by 2027.

The first shipments are intended for Chinese chip manufacturers such as SMIC, Hua Hong Semiconductor, and ChangXin Memory Technologies (CXMT).

Nevertheless, this development remains important for investors. China has been a key market for ASML for years. If Chinese manufacturers ultimately succeed in producing competitive DUV machines on a large scale, this could have long-term implications for the company’s growth. For now, however, analysts say ASML’s machines retain a clear technological edge.