What happened

Shares of ASML Holding (ASML -1.00%) 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.

So what

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.

The latest restrictions have investors feeling nervous about other semiconductor equipment players, too: Applied Materials and KLA both fell by around 10% this week. In addition, there are signs that the semiconductor industry is moving from a supply shortage to a supply glut as consumer and business behaviors shift again from what they were earlier in the COVID-19 pandemic. Investors' concerns about the potential impacts of all these headwinds have caused them to bid down ASML's stock price down by more than 50% year to date.

Now what

If you're an investor in ASML, the latest restrictions on tech exports to China might make you worried about the company's future. However, shift your focus to some of its largest non-Chinese customers, such as TSMC and Intel, and the future looks quite bright. Both of those companies are set to spend hundreds of billions of dollars over the next decade on new factories across Asia, North America, and Europe. ASML has a monopoly on advanced lithography equipment, so plenty of those capital expenditures will go toward buying its wares.

Even if ASML can't sell its equipment to Chinese chipmakers, it shouldn't have to worry about finding customers for its equipment this decade. Given that, now might be a good time to purchase some shares of ASML stock to hold for the long haul.