The United States has launched the chip bill , requiring ASML and other chip equipment companies not to export equipment below 14nm process to China. This move is undoubtedly an attempt to further restrict the development of Chinese chips. However, ASML has faced great difficulties since this year. In order to survive, ASML has long stepped up the sale of lithography machine to China.
ASML has developed the first generation of EUV lithography machines. In recent years, it has earned huge profits from by selling EUV lithography machines. However, DUV lithography machines are still an important source of revenue. The reason is that customers who need EUV lithography machines are quite limited at present, including TSMC, Samsung and Intel, as well as Chinese chip manufacturing companies. However, for some reasons, ASML cannot sell EUV lithography machines to Chinese chip companies.
When EUV lithography machines have very limited customers, mature DUV lithography machines have become its important source of revenue. Recently, ASML President and CEO Peter Wennink said that a large proportion of revenue comes from DUV lithography machines in mainland China, and DUV lithography machines are still being shipped in large quantities.
Especially since the beginning of this year, the global chip market has experienced oversupply, and the demand for costly advanced processes is declining. Apple , AMD and NVIDIA, which adopt advanced processes, have all reported order cuts. For this reason, TSMC, which accounts for more than half of the foundry market, has planned to expand the production capacity of such as 28nm again, because these mature processes have lower costs, and the low-cost mature processes in the downward stage of chips have won more welcome from customers. Gartner, an agency in the era of
, said that the chip industry will fall into recession next year, so the chip industry will pay more attention to costs, and the mature process of producing low-cost DUV lithography machines is expected to receive further attention. For ASML, which mainly sells optical technology, DUV lithography machines may become the key to its survival next year.
For ASML, the importance of Chinese chips has been particularly prominent in the past two years. When it cannot deliver EUV lithography machines to China, China still purchases DUV lithography machines in large quantities. In 2021, China contributed US$29 billion to ASML and was its largest customer. Data in the first quarter of this year showed that one-third of ASML's lithography machines were sold to Chinese chips.
As China contributed a lot of revenue to ASML, ASML's revenue fell by nearly 20% in the first quarter and its profits were halved. If China lost this customer, ASML's performance losses may be even more serious. Especially as we are entering the chip downward stage, China may be the only economy that continues to maintain chip expansion plans, and China is more likely to affect the survival of ASML.
In the face of the US's approach, ASML executives said that restricting the sale of mature DUV lithography machines is not good for the global chip industry chain . For this reason, it has largely supplied US$1.1 billion lithography machines to China before the United States introduced new measures, hoping to obtain as much revenue as possible and provide guarantees for its survival.
In fact, the United States can no longer provide more revenue for ASML. The United States once ranked at the forefront of the global chip manufacturing industry, accounting for 37% of the market share of . However, in the past 20 years, the United States now accounts for as low as 12% of the global chip manufacturing market. The United States has introduced a chip bill to subsidize American chip companies. However, Intel, the largest chip company in the United States, has built the most advanced Intel 4 factory in Ireland. This shows that the chip manufacturing plan that the United States has vigorously promoted has difficulties and naturally cannot buy more lithography machines from ASML. China has become the world's third largest chip manufacturer and can contribute more revenue to ASML.
Faced with this situation, ASML was helpless. It could only try its best to win the support of Chinese customers within its capabilities and sell lithography machines to China before the ban took effect. The author believes that if the chip market declines too much in the next two years and the global industry's demand for lithography machines will further decrease, ASML may also relax the conditions for selling lithography machines to some extent in order to survive and strive for Chinese customers.
