US says ASML’s top chip tool may be in China; ASML denies it

U.S. Commerce Secretary Howard Lutnick has raised alarms with top ASML executives, suggesting that one of the Dutch company’s extreme ultraviolet (EUV) lithography machines may have been smuggled into China. These are the only tools on Earth capable of printing the most advanced semiconductor patterns, and their presence in China would represent a catastrophic failure of the export controls that have banned such sales since the first Trump administration.

The claim is serious. Senior administration officials told Bloomberg they possess evidence that ASML shipped EUV-related components and transport equipment to China. Yet they have repeatedly refused to show that evidence,to Bloomberg or, apparently, to ASML itself. The company insists no such machine exists on Chinese soil and never has. The Commerce Department declined to answer Bloomberg’s questions about whether it has proof of an actual EUV system in China.

This may seem like an inside-baseball issue for chip industry insiders, but it matters far beyond that. ASML is a Dutch firm most people have never heard of, yet it is, by a wide margin, the most important company in the global AI buildout after Nvidia and the hyperscalers. It manufactures the only machines capable of EUV lithography, the process that prints the microscopic circuit patterns defining the most advanced chips.

Every cutting-edge processor from TSMC,the foundry behind Nvidia’s and Apple’s chips,relies on ASML tools that took roughly two decades and untold billions to develop. There is no second supplier. That monopoly has made ASML Europe’s most valuable public company, with a market cap hovering around $700 billion as of this week, driven higher by insatiable AI chip demand.

That scale is precisely why the China question is so consequential. If even a single EUV machine reached Chinese hands, it would be one of the most significant breaches of the export-control regime the U. S. has built over the past several years to keep advanced AI capability out of Beijing’s military and industrial base.

I spoke with ASML CEO Christophe Fouquet six weeks ago, well before this story broke, and asked him directly about the China question. He told me ASML tracks every machine it has ever shipped. They are either in active use with monitored customers or have been dismantled and returned to the company. He said the firm built an internal firewall years ago: employees who can access EUV technology, documentation, and training are walled off from those who cannot, and ASML’s China-based staff sit on the wrong side of that wall by design. He argued the only reason ASML could build an EUV machine at all was that 80% of it already existed from decades of prior knowledge, and solving the one genuinely new problem,generating EUV light itself,took 20 years on its own. His broader point: you cannot reverse-engineer a machine you have never had, and nobody in China has had one.

There is also a simpler commercial logic working against the idea that ASML would risk its export license to quietly arm a Chinese customer. ASML does sell older-generation deep ultraviolet (DUV) tools to China,gear it first shipped a decade ago,but Fouquet framed that explicitly as a protective calculation, not a loophole. The idea, he suggested, is that it keeps enough of a generational gap that customers can still do business without manufacturing their own future competitor. ASML expects roughly 20% of its 2026 revenue to come from already-permitted sales to China. Risking the EUV ban entirely would put that revenue, and the company’s standing as the most valuable monopoly in European industry, on the line over a single illegal sale.

None of this proves the allegations are false. The government has not yet made its evidence public, and it is worth withholding judgment until it does.

The Commerce Department, under Lutnick’s leadership, agreed late last year to put up to $150 million of taxpayer money into xLight, a startup developing a next-generation light-source technology that has been described as a long-term challenge to the core of ASML’s EUV monopoly. xLight’s CEO told me last year that the company sees itself as a future partner to ASML, not a rival, building hardware meant to plug into ASML’s machines rather than replace them. When I put that framing to Fouquet in May, he was polite but unconvinced. ASML, he made clear, does not see itself as needing xLight’s technology to keep its lead.

Does that have anything to do with why Lutnick is suddenly pressing ASML on EUV? Nothing public connects the two. It could be entirely unrelated. But a federal official scrutinizing a monopoly while his own agency has money riding on a startup angling to improve that monopoly’s core technology is worth examining.

xLight is not the only outside bet on the future of lithography. Peter Thiel, who has his own long-running ties to Trump’s political orbit, has backed Substrate, a separate startup explicitly pursuing its own EUV-rival technology with ambitions to compete with ASML more directly than xLight says it intends to.

As Bloomberg notes, a bipartisan bill moving through Congress would go much further than EUV. It calls for an effective ban on all of ASML’s DUV shipments to China, the less advanced lithography tools that account for roughly a fifth of the company’s expected 2026 revenue. The bill cleared a key committee in April, and the Trump administration has not taken a formal position on it.