By Asa Fitch
Dutch chip-manufacturing equipment giant ASML on Wednesday offered perhaps the most clear-cut illustration yet of how U.S. tariffs are rippling through the semiconductor industry's complex supply chain.
Chips and the pricey chip-making equipment that ASML produces are for now exempt from the tariffs.
Even so, ASML and others like it-big equipment manufacturers that operate around the globe-are exposed in ways that aren't immediately obvious. Citing the uncertainty, the company widened its revenue and gross-margin guidance range for its current quarter. It also reported first-quarter orders below analysts' expectations, sending its U.S. shares lower.
ASML brings in steel and aluminum to make parts of its machines-some of which go for around $400 million and are crucial in making the most advanced chips in the world-in the U.S. There is a blanket 25% tariff on those metals.
The company also often ships parts and tools between the U.S. and Europe multiple times as it makes its machines. Paying a tariff each time those supplies come into the U.S. would make U.S. manufacturing more costly. Management could calculate that it's better to keep manufacturing in Europe to whatever extent possible.
Yes, the company could move manufacturing entirely to the U.S. Given the company's Dutch roots, the astronomical cost of doing so and the long lead times on the equipment necessary for it, it would take years to do that-maybe decades.
And manufacturing inputs needed for such an operation may not be exempt from tariffs. No reasonable person would make such a decision when U.S. tariff policy is changing almost by the day.
ASML finance chief Roger Dassen also noted that the company's exports from the U.S. could be impacted if other destination countries retaliate with their own tariffs.
For now, the uncertainty about the direction of tariffs limits ASML's ability to put a number on the impact. With Trump recently threatening to target semiconductors with specific tariffs, an even deeper one could be in store for it and the whole industry.
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(END) Dow Jones Newswires
April 16, 2025 10:08 ET (14:08 GMT)
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