ASML's Top Chip Tool: US Claims China Has It, ASML Denies.

In a series of recent discussions, U.S. Commerce Secretary Howard Lutnick has reportedly conveyed to senior ASML executives his apprehension that one of the Dutch chipmaker’s extreme ultraviolet (EUV) lithography machines may have found its way to China, according to Bloomberg. These EUV systems are the sole technology globally capable of manufacturing the most advanced semiconductor patterns. Such an occurrence would signify a significant violation of export controls, which have prohibited ASML from selling EUV technology to China since the initial Trump administration.

This claim carries considerable weight. While senior administration officials informed Bloomberg that they possess evidence of ASML shipping EUV-related components and transport equipment to China, they have consistently declined to present this evidence, either to Bloomberg or, it appears, to ASML itself. The company firmly asserts that no such machine exists, nor has ever existed, in China. The Commerce Department did not respond to Bloomberg’s inquiries regarding whether it holds proof of an actual EUV system located on Chinese territory.

Even for those outside the semiconductor industry, this situation warrants close attention. ASML, a Dutch entity largely unknown to the general public, stands as arguably the most critical company in the global artificial intelligence expansion, aside from giants like Nvidia or the hyperscalers. It holds a unique position as the exclusive manufacturer of machines capable of EUV lithography — the intricate process vital for imprinting the microscopic circuit patterns that define the most advanced chips.

Every cutting-edge processor produced by TSMC, the foundry responsible for chips used by Nvidia and Apple, relies on ASML's sophisticated tools. These instruments represent approximately two decades of development and untold billions in investment by the company. Currently, there is no alternative supplier. This monopoly has propelled ASML to become Europe’s most valuable publicly traded company, with its market capitalization hovering around $700 billion this week, experiencing a sharp increase over the past year driven by insatiable AI-fueled chip demand.

The sheer scale of ASML's influence underscores why the question of China is so paramount. Should even a single EUV machine have reached Chinese hands, it would constitute one of the most profound breaches of the export-control framework painstakingly constructed by the U.S. over recent years to safeguard advanced AI capabilities from Beijing’s military and industrial infrastructure.

Six weeks prior to the emergence of this story, I engaged in a conversation with ASML CEO Christophe Fouquet, directly addressing the concerns surrounding China.

Fouquet explained that ASML meticulously tracks every machine it has ever shipped, confirming they are either actively utilized by monitored clients or have been dismantled and returned to the company. He detailed the establishment of an internal "firewall" years ago, separating employees with access to EUV technology, documentation, and training from those without, with ASML’s China-based personnel intentionally positioned on the restricted side of this barrier. He emphasized that ASML's ability to construct an EUV machine at all stemmed from 80% of its components and knowledge already existing from decades of prior research, while solving the singularly novel challenge of generating EUV light itself consumed 20 years. His overarching point seemed to be that one cannot reverse-engineer a machine they have never possessed, and no entity in China has had one.

Furthermore, a simpler commercial rationale argues against ASML jeopardizing its export license to covertly supply a Chinese customer. ASML does sell older-generation deep ultraviolet (DUV) tools to China — technology first introduced a decade ago — but Fouquet explicitly framed this as a strategic protective measure, not a loophole. The intention, he suggested, is to maintain a sufficient generational gap, allowing customers to continue business without inadvertently fostering a future competitor for ASML. The company anticipates approximately 20% of its 2026 revenue to originate from these already-permitted sales to China. Risking the complete EUV ban for a single illicit sale would imperil that substantial revenue, alongside ASML’s standing as Europe’s most valuable industrial monopoly.

It is important to note that these explanations do not definitively disprove the allegations. The government has yet to publicly disclose its evidence, and it remains prudent to reserve judgment until such information is presented.

Under Secretary Lutnick’s direction, the Commerce Department late last year committed up to $150 million in taxpayer funds to xLight, a startup developing a next-generation light-source technology that has been discussed as a potential long-term challenger to the core of ASML’s EUV monopoly. xLight’s CEO previously stated last year that the company views itself as a future collaborator with ASML, rather than a competitor, creating hardware designed to integrate with ASML’s machines instead of replacing them. When this perspective was presented to Fouquet in May, he responded politely but remained unconvinced, making it clear that ASML does not perceive a need for xLight’s technology to maintain its market leadership.

Whether this investment has any bearing on Lutnick’s sudden intensified scrutiny of ASML regarding EUV remains publicly unconnected; the two situations could be entirely unrelated. However, the scenario of a federal official investigating a monopoly while his agency simultaneously funds a startup aiming to enhance that monopoly’s foundational technology warrants further examination.

xLight is not the sole external investment in the future of lithography. Peter Thiel, who maintains long-standing ties to Trump’s political circle, has provided backing for Substrate, a distinct startup explicitly pursuing its own EUV-rival technology, with ambitions to compete more directly with ASML than xLight claims it intends to.

Bloomberg also points out that a bipartisan bill currently progressing through Congress proposes measures far more extensive than merely restricting EUV — it calls for an effective prohibition on all of ASML’s deep ultraviolet (DUV) shipments to China. These less advanced lithography tools currently account for roughly one-fifth of the company’s projected revenue for 2026. The bill successfully cleared a crucial committee in April, though the Trump administration has not yet formally stated its position on the matter.