European companies that make tools used to manufacture semiconductors lost ground Tuesday after U.S. lawmakers introduced draft legislation intended to tighten controls on exports of chipmaking equipment to China. The Multilateral Alignment of Technology Controls on Hardware Act - commonly referred to as the MATCH Act - was proposed last week by a bipartisan pair of lawmakers and prompted investors to reassess sales and service risks for key equipment suppliers.
The draft measure, put forward by Democrat Andy Kim and Republican Pete Ricketts, would align restrictions faced by non-U.S. manufacturers with those already applied to U.S. firms. Its text targets a narrow but critical subset of machinery by banning exports of immersion lithography tools to China and by limiting servicing of installed equipment - including maintenance and upgrades - performed by non-U.S. personnel.
In trading, shares of ASML - the world’s largest maker of equipment used to produce chips - declined 4% in Amsterdam. Other European names in the sector moved lower as well; ASM International and BE Semiconductor both edged down modestly.
The proposed legislation would explicitly bar sales to several leading Chinese chipmakers named in the draft, including SMIC, Hua Hong, Huawei, CXMT and YMTC. Those prohibitions, if enacted as written, would cover older immersion lines that ASML and others have been able to sell into China and to South Korean and Taiwanese firms operating plants in China - transactions that the draft would render impermissible.
ASML already faces limits on its most advanced systems. Existing arrangements coordinated between the U.S. and Dutch governments prevent the company from exporting extreme ultraviolet (EUV) lithography machines to China. The MATCH Act would extend restrictions further into immersion lithography - a technology segment in which ASML is the dominant player and where it competes primarily with a smaller Japanese rival, Nikon.
The company’s exposure to China was highlighted in figures cited by ASML earlier this year: China accounted for 33% of the Dutch firm’s sales in 2025, a share ASML said in January it expected to fall to roughly 20% this year. The draft proposal would further curtail the company’s addressable market in China if implemented as written.
Bank of America strategists noted the draft faces a difficult route to becoming law, since it must clear both chambers of Congress before reaching the president. The analysts said the bill could fail or be weakened in the legislative process. They also outlined the procedural scenarios that would follow a presidential veto, observing that Congress could override a veto with a two-thirds majority.
Analysts at Bank of America nevertheless kept a Buy rating on ASML, arguing that any hit to earnings might be more limited than the market initially feared. Their view includes several offsetting factors they believe could reduce the potential EBIT impact - which they estimated could be cut by about 50% to 8-9% under certain assumptions. Those offsets include the continued strength of memory-sector demand outside China, ASML’s capacity constraints for immersion tools through the first half of 2026, and the possibility that implementation could be delayed by diplomatic developments - the analysts pointed to a planned presidential visit to China in mid-May and referenced a delay seen in October 2025.
Beyond the legislative route, analysts and market observers cautioned that U.S. administrative agencies could achieve similar outcomes without new statutes. The U.S. Bureau of Industry and Security could, in theory, apply the Foreign Direct Product Rule to exercise jurisdiction over non-U.S. companies that incorporate American technology into their products - an enforcement mechanism that would not require Dutch government approval.
For market participants, the draft MATCH Act raises several practical questions about near-term order flow, service arrangements and supply-chain planning for both equipment makers and the chipmakers that rely on their tools. While the bill’s prospects in Congress are uncertain, its introduction was sufficient to prompt a reassessment of revenue and servicing risks across the semiconductor equipment sector.
Key takeaways
- Proposed MATCH Act would bar immersion lithography exports to China and restrict non-U.S. personnel from servicing installed equipment.
- ASML shares fell 4% in Amsterdam; ASM International and BE Semiconductor also moved lower.
- Bank of America kept a Buy rating on ASML but noted the legislation faces significant hurdles and that administrative measures could produce similar effects.
Context for markets
The primary market impacts are concentrated in semiconductor equipment manufacturers and Chinese chipmakers that depend on imported systems and service. Broader supply-chain and capital expenditure planning in the chip industry could be affected if restrictions on sales and servicing are enacted or enforced administratively.