US-China AI feud leaves ASML walking a tightrope between sales and geopolitics

This report is from this week’s The Tech Download newsletter. Is it what you see? You can subscribe here.

ASML It’s a balancing act.

However, sales from China still account for a significant portion of revenue.

Although down from a year ago, China will contribute about 20% of ASML’s revenue in 2026 overall, CFO Roger Dassen said in a transcript of a video interview.

Meanwhile, as the battle for AI supremacy between the two countries intensifies, political headwinds in the United States have imposed strict export controls on the sale of semiconductor manufacturing hardware to China.

This puts Europe’s most valuable company in the delicate position of having to satisfy Western governments and shareholders at the same time. Demand for ASML machines is growing in China, but there are also calls for tighter export controls in Washington.

“While China remains an important market for ASML, Dutch suppliers are trying to walk a geopolitical tightrope between Beijing and Washington,” Neil Shah, vice president of research at Counterpoint, told CNBC.

Backtracking a bit, on Wednesday, ASML raised its guidance for the second time this year and reported better-than-expected quarterly results as customers continue to ramp up production of AI chips.

Despite the explosive growth in earnings, the stock price has been largely flat (something of a theme among AI companies this year).

But what’s really interesting to me is the story at the intersection of AI and geopolitics. In this case, it’s ASML’s activities in China.

As it stands, the Dutch giant is not shipping its most advanced chip-making equipment, including extreme ultraviolet lithography (EUV) equipment, to the country after years of export restrictions. However, China does buy and sell some of the less advanced deep ultraviolet (DUV) lithography equipment, which involves a huge number of machines.

Sales in China reached €2.9 billion ($3.3 billion) in the first half of 2026, accounting for approximately 16% of total sales.

Dassen’s comments that China sales will account for about 20% of net sales for the full year 2026 suggests that revenue from the country will increase in the second half of 2026 compared to the first half of 2026.

“The Chinese market is moving in sync with the overall movement we’re seeing globally,” Dassen said. “If you really want to pinpoint where that extra demand is in China, it’s primarily the logic business, and then primarily serving domestically driven demand.”

Bernstein senior analyst David Dai told CNBC that China’s semiconductor equipment spending is expected to grow by about 10% annually over the next 24 months.

But as demand grows, some U.S. lawmakers want to restrict China’s access to less sophisticated ASML machines.

Earlier this year, the country’s lawmakers petitioned Secretary of State Marco Rubio and Secretary of Commerce Howard Lutnick to impose stronger regulations on semiconductor manufacturing tools.

In April, the MATCH (Multilateral Coordination of Hardware Technology Management) Act was tabled.

“The proposed US MATCH Act is aimed squarely at denying most chip manufacturing technology to China, which could have a significant impact on ASML’s order book in the coming years,” Sandeep Rao, a researcher at Leverage Shares, told CNBC.

ASML stock fell when this bill was introduced. If the law passes, Chinese companies could be barred from purchasing even ASML’s DUV lithography equipment, which can be used to make less sophisticated semiconductors.

It remains to be seen whether that will happen and how it will affect ASML’s revenue.

The company, which has a monopoly on the machinery essential to manufacturing cutting-edge chips, is sure to see huge demand for its products globally amid the growing AI boom.

However, in the first half of 2026, China was the third largest region in terms of ASML revenue, behind South Korea and Taiwan. The semiconductor giant earned nearly 1 billion euros more from the country than the US

Chinese startup Moonshot AI has announced a new model that closes the gap with the American flagship and outperforms OpenAI and Anthropic’s most capable systems on some benchmarks.

NvidiaFireworks, a cloud startup backed by , has raised $1.5 billion at a valuation of $17.5 billion.

Share prices of Chinese tech giants alibaba and Baidu announced Thursday a partnership with Apple to deploy AI tools.

Anthropic is preparing to meet with investors ahead of an initial public offering later this year, people familiar with the plans told CNBC.

Google The AI ​​chief called on the US to lead a standards body that would oversee new AI models and assess national security risks, including cybersecurity and biological threats.

AI agents are one of the biggest buzzwords in technology right now. But what do they actually do within a company?

Sierra co-founder Clay Bavor appeared with Arjun Kharpal on the podcast The Tech Download to discuss how companies are leveraging AI agents for customer service, sales, and support.

Baber said agents are a “new type of software” that can reason, make decisions, use tools and take actions without having to program every step in advance.

Sierra is working with companies like Rocket Mortgage and Cigna to deploy customer-facing AI agents that can process conversations, collect information, resolve issues, and escalate to humans when necessary.

This conversation also covers one of the biggest questions facing enterprise AI: ROI. After the first wave of experimentation, companies are now asking whether AI is actually creating measurable value.

Bavor explains why Sierra is promoting outcome-based pricing, where customers pay when an AI agent successfully completes a task.

We’ll reveal more in the podcast. Please listen

— Connor McLaughlin, Technology Producer