Investors Accuse ASML of Downplaying Export Control Impact on China Sales
ASML, the major Dutch semiconductor tooling firm, is being accused of misleading investors about how its projected China sales and revenues were impacted by recently imposed export controls.
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A lawsuit filed last month by investor Anas Matar said ASML gave deceptive statements on sales calls and in filings with the SEC. The company failed to disclose that the headwinds ASML faced were “much more severe” than it had indicated, the lawsuit said, and that the recovery pace of semiconductor industry sales was proving to be “much slower” than it had publicly acknowledged.
ASML also created a “false impression” that it had more positive expectations about customer demand, and it wasn’t forthcoming about the hurdles brought on by new export control regulations over its chip manufacturing equipment, said the class action lawsuit, filed in the U.S. District Court for the Southern District of New York.
Matar said he and other investors “suffered significant damages” because of ASML’s “wrongful acts and omissions.” He asked for a jury trial and is looking for “compensatory damages and equitable relief” for the damages.
The lawsuit was filed about a month after a similar complaint was lodged against ASML by the City of Hollywood Firefighters’ Pension Fund, which also accused the Dutch firm of misleading investors. It said ASML “downplayed concerns” about how the controls would damage “ASML’s revenue from systems sold to customers in China.”
Both complaints specifically said ASML wasn’t transparent about the impacts of recent export controls put in place by the Dutch government. The Netherlands announced an initial set of controls in July 2023 (see 2306300028) and another set in September 2024 (see 2409090024), and although ASML disclosed that the rules would restrict some of its exports (see 2401260063), it said in 2023 that it didn't expect them to have a “material impact” on its financial outlook for the short or longer term.
Matar said that statement was misleading. He pointed to ASML’s 2024 third quarter financial results, published in October, which showed a 53% decline in quarterly bookings compared with the previous three months. The company also revealed in that Q3 report that it expected its 2025 net sales to be between about $30 billion and $35 billion, which Matar said didn’t align with more optimistic comments made by CEO Peter Wennink during a sales call earlier that year.
Matar also said Wennink, during that same call, “downplayed concerns” about the impact of the export controls on its China sales. Although the company said it expected the new restrictions to hurt its China-related revenue by 10% to 15%, Wennink during the call “reassured investors that ‘we continue to see strong demand,’” the lawsuit said. It said CFO Roger Dassen “also downplayed” a decline in ASML’s orders, saying in an April 2024 earnings call that the company “would benefit from a ‘significant uptick’ in orders in 2025” and a “very strong recovery.”
Those statements were “materially false and misleading, and failed to disclose material adverse facts about the Company’s business and operations,” the lawsuit said, pointing to the fact that the financial results released by ASML in October were all in the “lower” ranges of the figures it had been disclosing to investors. Matar noted that the price of ASML shares “plummeted” about 16.3% soon after.
Matar’s lawsuit accuses ASML of hiding the “truth about the Company’s business and revenue prospects” to artificially prop up share prices. Investors, including Matar, “would not have purchased the Company’s ordinary shares and call options at the prices they paid, or at all, had they been aware that the market prices had been artificially inflated by Defendants’ fraudulent course of conduct,” it said.
An ASML spokesperson declined to comment.