ASML Holding(US:ASML) Sou Hu Cai Jing·2025-10-16 16:35Core Viewpoint - European tech companies, particularly ASML, are increasingly concerned about their reliance on Chinese rare earth materials amid export controls and geopolitical tensions [1][3][11]. Group 1: ASML's Situation - ASML's lithography machines require rare earth materials, especially heavy rare earths like neodymium, dysprosium, and terbium, which are critical for magnetic and high-temperature components [3]. - China holds 36% of global rare earth reserves and nearly 90% of refining capacity, making it a crucial player in the supply chain [3]. - ASML's revenue for the first half of 2024 was approximately €11 billion, with 14% of that coming from the Chinese market, highlighting the importance of China as both a customer and a supplier [5]. Group 2: Export Controls and Supply Chain Challenges - ASML is facing a paradox where it is restricted from selling machines to China while simultaneously relying on Chinese rare earths for production [5][7]. - The company must report any lithography machine that contains more than 0.1% rare earth materials to China, indicating the significant role these materials play in their technology [5]. - ASML's long delivery times for machines (over a year) mean that once current inventory is depleted, they will face challenges in sourcing materials from China due to export regulations [9]. Group 3: Geopolitical Implications - The situation reflects a broader geopolitical struggle, with the U.S. and its allies imposing technology export restrictions while China counters by controlling upstream resources [11][13]. - The Netherlands, caught between the U.S. and China, faces criticism for its short-sighted policies that may harm its long-term industrial interests [9][11]. - China's strategic moves in controlling rare earth exports are seen as a calculated response to Western sanctions, emphasizing its resource leverage in the global supply chain [11][13].