ASML fell 6.67% on chip-spending fears; its €38.8 billion backlog is booked and China truce ends January 10
ASML fell 6.67% on capex-deferral fear the day before reports confirmed EUV customers are pre-booking slots into 2029 and 2030. The risk worth pricing is not demand, it is the China revenue line, whose governing truce expires on January 10, 2027.
Richard Tang · 3 min read
The selloff priced the wrong risk. On November 5 ASML+5.89% — ASML, up 5.89 percent today fell 6.67% with the tech equipment sector on fear that chipmakers will defer capital spending and bookings will lull 4. Yet the company's own order book says the opposite: demand already exceeds planned EUV capacity for 2027 and 2028, customers are booking slots into 2029 and 2030, in some cases pre-paying 2.
When buyers prepay for machines three years out, capex deferral is not the live risk. The live risk is a rulebook: the China revenue line, which runs on a US-China truce that expires on January 10, 2027 1.
A record quarter, and orders booked into 2030
Start with what the quarter established. On October 14 ASML reported record net orders of €13.2 billion, including €7.4 billion in EUV, a €38.8 billion backlog, and raised the floor of its 2026 revenue guidance to €44 billion 1. Morningstar's analyst called the key disclosure the first conversations for 2029 and 2030 orders, with DRAM makers most open to booking that far out 5.
ASML is the only maker of EUV lithography machines, the tools that pattern the transistors inside Nvidia's+6.24% — Nvidia, up 6.24 percent today AI chips, so TSMC+7.01% — TSMC, up 7.01 percent today, Samsung and Micron+8.62% — Micron, up 8.62 percent today have nowhere else to go 1. The bottleneck in the AI buildout is ASML's factory floor, not anyone's willingness to spend. That is why dip-buyers such as Milford Asset Management's Andrew Curtayne pitched the stock at the Sohn conference the same week the sector fell 3.
The China annuity is the part to price separately
The fear the market should hold sits in a fifth of revenue. China was about 33% of ASML's 2025 sales, fell to 14% by the second quarter of 2026, and is guided to roughly 20% for the full year, mostly immersion DUV tools and the service contracts attached to them 1. The Busan trade truce that governs the flow runs out on January 10, 2027 1.
China's share of ASML revenue is fading toward a fifth of sales
China's share of ASML revenue halved by mid-2026
- Estimate
Data
| Value | |
|---|---|
| FY2025 | 33% |
| Q2 2026 | 14% |
| FY2026 guide (estimate) | 20% |
The MATCH Act targets the DUV machines still legal
On top of that, the pending MATCH Act in Congress would give the Netherlands 150 days to match US export controls or lose jurisdiction over Dutch-made tools, and it targets exactly the immersion DUV machines ASML can still legally sell to China 1. ASML's CFO Roger Dassen opposes the bill and argues it would accelerate China's domestic rivals, while saying he is optimistic common sense will prevail 6.
Neither of those dates has produced a ruling yet, so nothing in the November selloff was new information about them. What was new, the day after the rout, was confirmation that the 2029 backlog is real and partly paid for 2. Two books, two clocks: a three-year prepaid order book that deferral fear cannot touch, and a nine-week rulebook on the China line. Price the first on chipmakers' AI buildout and the second on Washington, and the November 5 move looks like the wrong worry attached to the right stock 2.
Get Chips by email, free
How AI demand is reshaping chipmakers, memory and the fabs behind them. In our daily email, every weekday.