06 Nov 2023 -

ASML faces US export curbs but sees robust Chinese demand

semiconductor fabrication

Peter Wennink, the CEO of Dutch semiconductor equipment manufacturer ASML Holding, recently shared that an additional product from the company’s portfolio has been impacted by the newly introduced US export regulations. This statement was made during a press conference following the announcement of ASML’s third-quarter results, reports South China Morning Post.

Despite facing growing export constraints from both the US and Dutch administrations, Wennink remains optimistic about persistent robust demand from Chinese chip producers. He revealed that ASML’s 1980Di tool is the latest to be affected by these restrictions. Notably, the 1980Di tool plays a pivotal role in manufacturing both advanced and older generation computer chips.

In an interesting twist, major South Korean companies, Samsung Electronics and SK Hynix, have been given indefinite exemptions from expansive limitations on exporting cutting-edge chip-making equipment to mainland China. Elaborating on the scenario, Wennink mentioned, “In principle the 1980s would fall under the export control restrictions, but only when … (they) are used for advanced semiconductor manufacturing.” He also noted that only a select few Chinese facilities qualify as “advanced”.

ASML has carved a niche for itself, holding a commanding position in the market for lithography equipment. This technology is instrumental for chip giants such as Taiwan Semiconductor Manufacturing Co, Samsung Electronics, and Intel Corp, aiding in the design of chip circuitry. Mainland China ranks as the third most significant market for ASML, following Taiwan and South Korea.

However, ASML experienced a decline in order intake during the third quarter, a reflection of the broader downturn in the semiconductor sector. Orders plummeted by 42% to €2.6 billion during July-September, compared to the preceding quarter. This downturn is attributed to economic pressures like inflation and recession apprehensions, which have dampened consumer spending. To navigate these challenges, ASML earlier declared its intent to decelerate recruitment.

Despite these setbacks, Wennink envisions sustained demand from China, especially for mature technologies. He estimated that the new export regulations would only affect approximately 15% of ASML’s sales to the Chinese market. However, in light of the wavering economic climate, ASML has forecasted that its sales might remain stagnant until 2024.

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