Shares of ASML Holding (NASDAQ: ASML) fell by as much as 16.4% this week, according to data from S&P Global Market Intelligence. Investors likely sold off the chip manufacturing equipment supplier because of the U.S. government's increased restrictions on sales to companies in China. As of 12:05 p.m. ET Friday, shares of ASML were down by 11.1% compared to last week's closing price.

ASML sells lithography equipment to computer chip manufacturers -- key tools that allow them to make more advanced and smaller semiconductors for smartphones, cars, and other devices. The ultra-advanced technology ASML provides helps companies like Taiwan Semiconductor Manufacturing (TSMC) build semiconductors with ever-increasing transistor densities (the more transistors on a chip, the more powerful and efficient it will be), including the currently state-of-the-art 5-nanometer process node. Without ASML's equipment, these manufacturers would not be able to continually improve the computer chips they produce.

With this in mind, it's no surprise that ASML's stock fell after the U.S. government imposed further restrictions on semiconductor equipment sales to China this week. Amid increasing trade tensions, Washington had already blocked ASML from sending its most advanced extreme ultra-lithography (EUV) machines to China, but that ban has now been expanded to include even more equipment. In 2021, 25% of ASML's revenue came from mainland China, so its sales could suffer due to these restrictions.

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Source Fool.com