Additional US restrictions on semiconductor equipment exports to China could have a significant impact on ASML Holdings’ (ASML) earnings before interest and taxes (EBIT), according to a recent Bank of America research note.
The bank’s analysts suggest ASML’s EBIT could be cut by 3% to 30%, depending on the severity of restrictions and ASML’s ability to redirect revenue lost in China to other regions.
Bank of America emphasizes that recent discussions among investors indicate concerns about the possibility of escalating export restrictions.
The note said that last week’s media reports suggested that the US government could limit ASML’s ability to serve certain customers in China. These service restrictions alone could impact group sales by 1% to 3%.
The bank outlines three possible scenarios for further export controls. The most likely scenario, they say, is a complete ban on ArFi immersion and service for limited entities in China, which could reduce ASML’s CY25/26E group EBIT by 3% to 4%, net of mitigation.
The second scenario, a complete ban on ArFi immersion and service across China, could lead to a 10% EBIT reduction, net of mitigation. The least likely scenario includes a complete ban on deep ultraviolet (DUV) lithography and service for China, with potential EBIT reductions ranging from 12% to 15% net of mitigation.
Despite these risks, Bank of America maintains a buy rating on ASML with a price target of €1,302 (US$1,406). They argue that the current market is too pessimistic and prices in a roughly 50% chance of a complete DUV ban within the next 12 to 24 months.
They view the current share price as an attractive buying opportunity in the run-up to Capital Markets Day in mid-November.
The note also states that such bans could disrupt global supply chains in the automotive and industrial sectors, which could potentially benefit European semiconductor manufacturers such as STMicro and Infineon as production could shift to their onshore facilities.
