According to Bloomberg, U.S. Commerce Secretary Howard Lutnick told ASML executives in a series of recent meetings that he was concerned that one of the Dutch chipmaker’s extreme ultraviolet lithography machines (an EUV system, the only tool on earth capable of printing cutting-edge semiconductor patterns) may have ended up in China. This is a serious violation of export regulations that have prohibited ASML from selling EUV to China since the first Trump administration.
That’s a serious claim. Government officials have told Bloomberg that they have evidence that ASML shipped EUV-related parts and transportation equipment to China, but they have repeatedly refused to show that – to Bloomberg, or apparently to ASML itself. The company says such machines do not exist in China and have never existed in China. The Commerce Department did not respond to Bloomberg’s questions about whether there is evidence that EUV systems are actually installed in China.
People outside the chip industry might think this isn’t worth paying attention to, but it is. ASML is a Dutch company that most people have never heard of, but it’s not just an Nvidia or hyperscaler name, it’s the most important company in building AI on a global scale. This will create the only machine on earth capable of EUV lithography, the process of printing the microscopic circuit patterns that define cutting-edge chips.
Every cutting-edge processor made by TSMC, the foundry behind Nvidia and Apple’s chips, relies on an ASML tool that the company spent nearly two decades and untold billions of dollars developing. There is no second supplier at this time. This monopoly makes ASML Europe’s most valuable publicly traded company, with a market capitalization trading at nearly $700 billion as of this week, which has soared over the past year on the back of insatiable demand for AI-driven chips.
This scale is why the China issue is so important. If even one EUV machine were to fall into Chinese hands, it would be one of the most serious violations of the export control regime the United States has built over the past few years to keep advanced AI capabilities out of China’s military and industrial base.
I met with ASML CEO Christophe Fouquet six weeks ago, long before this story broke, and asked him directly about the China issue.
Fouquet said ASML tracks every machine it has ever shipped. The machine is either in active use with a monitored customer or has been dismantled and returned to the company. He said the company built an internal firewall years ago that separates employees who have access to EUV technology, documentation and training from those who don’t, and that ASML’s China-based staff sits on opposite sides of that wall by design. He argued that the only reason ASML was able to build the EUV machine was because 80% of it already existed from decades of prior knowledge, and it took 20 years just to solve one truly new problem: producing the EUV light itself. His broader point seems to be that you can’t reverse engineer a machine you’ve never owned, and no one in China has ever owned one.
There is also a simpler commercial logic that runs counter to the idea that ASML could jeopardize export licenses to secretly arm Chinese customers. Although ASML does indeed sell an older generation of deep UV tools to China (China first shipped them 10 years ago), Fouquet clearly framed it as a safeguard rather than a loophole. The idea, he said, is to maintain enough of a generation gap so that customers can continue doing business without having to manufacture future competitors. ASML expects approximately 20% of its 2026 sales to come from already permitted sales to China. Risking a complete ban on EUV would jeopardize its profits and its status as the most valuable monopoly in European industry with just one illegal sale.
None of this proves that the allegations are false. The government has not yet released the evidence, and it is worth suspending judgment until it does.
Under Lutnick’s leadership, the Commerce Department agreed late last year to commit up to $150 million in taxpayer funds to xLight. xLight is a startup developing next-generation light source technology that is being written as a long-term challenge to ASML’s core EUV monopoly. xLight’s CEO told me last year that the company builds hardware meant to connect to ASML’s machines, rather than replace them, and sees itself as ASML’s future partner, not a rival. When I presented the composition to Fouquet in May, he explained it carefully, but he was not convinced. He made it clear that ASML does not believe it needs xLight’s technology to maintain its lead.
Does that have anything to do with why Mr. Lutnick is suddenly pushing ASML to EUV? There’s nothing public linking the two. It may be completely unrelated. But it’s worth considering that federal authorities are scrutinizing monopolies even as they pour money into startups that are trying to improve on the monopolies’ core technology.
xLight isn’t the only outside bet on the future of lithography. Peter Thiel, who himself has long ties to President Trump’s political orbit, is backing Substrate. Substrate is another startup explicitly pursuing its own EUV rival technology, with ambitions of competing directly with ASML even more than xLight intends.
As Bloomberg points out, the bipartisan bill passed by Congress would go even further than EUV. The bill calls for a de facto ban on all ASML’s deep ultraviolet (DUV) shipments to China, less advanced lithography tools that account for about one-fifth of the company’s projected 2026 revenue. The bill passed out of key committees in April, but the Trump administration has not taken a formal position on the bill.
Photo above: ASML CEO Christophe Fouquet
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