By Asa Fitch

U.S. tariffs will stop Americans from buying a lot of things made overseas. For some of the most expensive things in the world, tariffs won't matter much.

Dutch chip-equipment giant ASML is the only company in the world capable of making machines that are indispensable in producing the most advanced semiconductors possible.

Each of their top-of-the-line machines fetches roughly $400 million. There aren't alternatives anywhere in the world, let alone in the U.S. It took ASML decades to develop the knowhow to make the machines, and would likely take as much time for a significant competitor to emerge.

And that means global chip-makers who want to make cutting-edge products on American soil-the likes of Intel, Samsung Electronics, Taiwan Semiconductor Manufacturing and Micron-will simply have to pay Trump's new toll of 20%.

To be sure, more than half of AMSL's sales derive from less-advanced machines that don't cost as much and for which there are alternatives. But even there the competition is limited and based outside the U.S.: the main alternatives are from Canon and Nikon in Japan.

ASML's stock has fallen over the past year, alongside other big chip-equipment companies like Applied Materials and Lam Research. They have underperformed the broader market largely due to concerns about U.S. restrictions on their sales in China and the recent struggles of two customers, Intel and Samsung.

ASML is more richly valued than its peers, but its competitive moat in some of the most complex equipment on Earth justifies at least a modest premium. Year-to-date, ASML has also outperformed the PHLX Semiconductor Sector index.

These companies aren't immune from the indirect impact of tariffs, of course: if people buy fewer electronics and AI equipment chips go into, chip manufacturing will pull back.

The bottom line, though, is that U.S. tariffs shouldn't have an outsized impact on ASML now or in the near future. The company's customers won't be happy, but investors in ASML's stock, which has declined about 7% since Wednesday's close, shouldn't feel too shaken.

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April 04, 2025 10:17 ET (14:17 GMT)

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