ASML Holding N.V. (ASML) has a message for President Donald Trump as Washington pushes allies to tighten controls on China's access to advanced semiconductor technology: pressure can backfire.

CEO Christophe Fouquet says going too far could accelerate China's efforts to develop its own chipmaking capabilities, potentially creating the stronger competitor export controls are meant to prevent.

ASML's China Warning

ASML already faces restrictions on selling its most advanced equipment to China, including its extreme ultraviolet, or EUV, lithography systems. The machines are essential to producing the most advanced chips used in AI applications.

But Fouquet says those restrictions should not go too far.

In an interview with the Financial Times, the ASML CEO acknowledged that some technology may need to be restricted for security reasons. His concern is what happens if those restrictions become too broad.

"If you over-restrict, you bring desperation," Fouquet said, arguing that desperation could create a stronger incentive to build competing technology.

The concern is not entirely theoretical. Fouquet pointed to Huawei's emergence as a significant force in China's development of deep ultraviolet, or DUV, lithography technology.

The Competitor Nobody Wants

That creates an unusual problem for ASML.

The company produces some of the most advanced EUV lithography machines. Reproducing that technology is enormously complex. ASML says its EUV machines involve more than 100,000 parts supplied through a network of 200 principal suppliers and roughly 2,000 companies.

The current export-control framework therefore limits China's access to a critical piece of the advanced-chip manufacturing chain.

Fouquet warns that restrictions can also change the incentive structure. If access to Western technology becomes increasingly difficult, developing alternatives becomes more strategically valuable for China.

That distinction is at the center of his argument: export controls may slow access to technology today while potentially increasing the motivation to replace that technology tomorrow.

What Investors Should Watch

For ASML investors, the China question is therefore bigger than near-term sales restrictions. It touches the durability of the company's technological lead and the possibility of new competitors emerging over a much longer timeframe.

Fouquet also rejects the idea that ASML can simply increase production by throwing more money at the problem. Its manufacturing ecosystem is too complex, he says, with capacity constrained by the broader supply chain.

That makes the company's moat difficult to replicate, but it also explains why export restrictions have strategic consequences beyond ASML's immediate China revenue.

The next question for investors is whether restrictions remain targeted or become broad enough to accelerate the domestic alternatives Fouquet is warning about.

For ASML, the China debate is ultimately also a debate over how long its technological lead can remain a monopoly.