, TSMC had stated that the semiconductor industry's prosperity has declined and the industry's downturn has arrived. Recently, the consumer electronics and other fields have continued to be sluggish, and the downstream market is sluggish, and the industry downturn may continue until the second half of 2023. Subsequently, the third-quarter financial reports of major chip manufacturers were released, which further reflects that chip manufacturers collectively encountered a "cold winter".
chip manufacturers are unable to compete with the downward cycle and collectively encounter a "cold winter". Under such circumstances, ASML recently announced that it will expand production of DUV and EUV lithography machines in total. Why is ASML so optimistic about the future?
chip manufacturers collectively encounter a "cold winter"
semiconductor field, they have their own leading manufacturers in the design and manufacturing of chip . After the third-quarter financial reports were released, these representative chip factories also announced that they had entered a "cold winter".
1. Chip design and sales manufacturers
Take Meixin manufacturers as an example. According to statistics, the market value of 100 listed chip companies in the United States has dropped by US$1.81 trillion (about 13 trillion yuan), and US semiconductor companies have also begun to lower their capital expenditures.
Judging from the data of several leading manufacturers, Meixin companies are not very good. For example, the stock price of Qualcomm fell sharply, with a year-on-year decline of 37.55%, and its market value fell to less than US$130 billion; AMD released its third-quarter financial report not long ago, showing that it plummeted 59.26% respectively during the year, and its market value fell below the 100 billion US dollar mark; Intel , its net profit in the third quarter fell by 85% year-on-year, and its market value has fallen by 45.38% this year.
2. Situation of chip foundry manufacturers
In chip foundry factories, the top giants are TSMC, Samsung , Intel and SK Hynix , among which Intel has already said to chip design manufacturers, so here we will focus on the other three.
First of all, TSMC lowered its capital expenditure a second time, which has lowered 20% to $36 billion. Moreover, due to the decline in the production capacity of TSMC in the advanced process, TSMC will also shut down some EUV lithography machines to save electricity costs. Not only that, recently, TSMC has also cut orders by 50% on the supply chain, covering multiple links such as regeneration of wafers, , key consumables, equipment, etc.
Secondly, Samsung is cutting smartphone production. According to Samsung's third-quarter financial report, its operating profit was 10.85 trillion won, a sharp drop of 31.4% compared with 15.8 trillion won in the same period last year. To this end, Samsung lowered the production target of smartphones to 330 million units to 280 million units.
Finally, SK Hynix also lowered its capital expenditure, which will cut by 50%. According to the third quarter report of Hynix , its company's profits fell by 60%. Due to the decline in demand for memory chip , Hynix decided to cut its investment in 2023 to 50% of 2022 (10-20 trillion won).
chip manufacturers are hard to compete with the downward cycle, and they have begun to gradually reduce production and reduce capital expenditures. However, ASML is expanding production at this moment.
ASML expands production of 690 devices
Recently, ASML CEO Peter Wennink predicted in an interview that chip production capacity will increase significantly in the past decade. At the same time, he also believes that the market demand for products is still strong, and it is expected that by 2030, the company's revenue will grow at a rate of about 11% per year.
Perhaps, in order to prove his words, ASML recently announced that it will increase annual production capacity from 2025 to 2026. It is understood that during this period, ASML's annual shipment of EUV equipment will be increased to 90 units and DUV equipment will be increased to 600 units.
Why is ASML so optimistic about the future?
It has to be said that ASML is indeed a very optimistic performance when chip manufacturers are collectively experiencing a "cold winter" and increasing production capacity against the trend. However, it is not unreasonable for its actions.
First of all, the demand for wafer foundry will continue to drive the growth of ASML production capacity.
Although chip manufacturers are currently cold and the industry is downward, from the perspective of customer applications, the demand for wafer foundry is still strong. Because, as a whole, each market is continuing to grow and innovate, it will drive the market's demand for advanced and mature processes, and wafer production capacity will also need more.
At the same time, the competition among foundries is also fierce. In order to seize the technological leadership, investment in advanced process technology will not be easily reduced, and will continue to drive the growth of ASML's advanced lithography equipment production capacity.
Secondly, semiconductor competitions between countries and regions promote the continuous growth of ASML production capacity.
For example, China, the United States, Europe, Japan, South Korea and India are all planning to support the development of local semiconductor industries, and there will inevitably be fierce competition between each other.
However, most of these competitions revolve around the fields of self-developed chips and chip manufacturing, which is of course inseparable from the demand for lithography machine . In particular, Chinese companies have invested in the semiconductor industry and started the road of self-development of chips in China. The DUV equipment needed in a short period of time naturally depends on purchases.
According to a research report on the capacity of semiconductor released by Boston Consulting Group , in the next ten years, 40% of the semiconductor production capacity will be added in China, becoming the world's largest semiconductor manufacturing base. For such a huge market, ASML naturally wants to get a share of the pie and expand its production capacity.
Conclusion
Although, major chip factories have encountered a "cold winter", it seems that the downward trend of the semiconductor industry will continue for a period of time. However, ASML dares to optimistically estimate and expand lithography equipment production capacity, and what it considers is also reasonable.
After all, in the next 10 years, with the support of high profit and fierce innovation ecosystem, there is still hope to continue to promote the growth of the entire semiconductor market.
What do you think about ASML’s expansion of production against the trend?
