Only 23% of the lithography equipment ASML sold in the third quarter went to China. A year ago, that figure was 42%.
Comparing the third-quarter financial reports of the four equipment makers ASML, Tokyo Electron, Lam Research, and KLA, the Chosun Ilbo reported on the 9th that sales share to China declined for all four compared with the same period last year. ASML posted record total revenue of €11.66 billion in Q3, including €8.4 billion in system sales. Broken down by shipment destination, Taiwan accounted for 32%, South Korea 31%, China 23%, and the United States 13%, making Taiwan the largest single market.
China’s Lost Share Flowing to Taiwan and South Korea
ASML shipped 121 lithography systems in Q3, including 113 new machines and 8 refurbished ones, with EUV system sales reaching €4.1 billion, one of which was a High NA EUV. According to the Chosun Ilbo, while China’s share declined, AI semiconductor investment in South Korea and Taiwan is expanding: Samsung Electronics and SK hynix are ramping up investment in high bandwidth memory (HBM) and advanced DRAM, while TSMC is expanding advanced process and packaging capacity, causing Lam Research’s sales to South Korea to double compared with the same period last year.
China Share Falls Across All Four Equipment Makers
According to the Chosun Ilbo’s tally, ASML’s China sales share fell from 42% in Q3 2025 to 23%, a drop of 19 percentage points — the largest among the four. Lam Research fell from 43% to 35%, KLA from 39.5% to 34.5%, and Tokyo Electron from 40.3% to 36.4%. At its earnings call, ASML still projected that China would account for roughly 20% of total revenue for full-year 2026.
Quarter-to-quarter swings were even sharper than year-over-year changes. ASML’s China share of system sales was still 36% in Q4 2025, then dropped to 19% in Q1 this year and 14% in Q2, before rebounding to 23% in Q3, reflecting unstable order patterns from Chinese customers. ASML posted net profit of €5 billion in Q3, with revenue of €11.66 billion translating to a net margin of about 43%.
The Other Side of Export Controls: Chinese Domestic Equipment Taking Local Market Share
The United States has restricted exports of advanced semiconductor equipment to China since 2022, with the Netherlands and Japan imposing similar controls on certain advanced equipment. China has turned the restrictions into a driving force for localization: NAURA and AMEC have replaced some etch equipment from Lam Research and Tokyo Electron. NAURA supplies SMIC’s 14-nanometer process and is reportedly testing 7-nanometer, while Chinese-made etch equipment is also used in YMTC’s high-layer-count NAND production lines.
Data from Georgetown University’s Center for Security and Emerging Technology (CSET) shows that Chinese vendors’ share of the global deposition equipment market rose from 7% in 2024 to 9.8% in 2026, while etch and clean equipment rose from 8.5% to 10.2%. The gap remains widest in the most critical area — lithography, where Chinese vendors hold less than 0.2% of the global market in 2026.
Asked at its earnings call whether China’s share could be maintained, ASML management replied that local Chinese demand remains strong, including beyond 2027. But the Q3 numbers tell the story: China 23%, Taiwan 32%.
