The decline in chip demand has caused many chip giants to adjust their capital expenditure plans, such as SK Hynix plans to reduce capital expenditure by 70% to 80% next year.

ASML has delivered a brilliant financial report

TSMC, Samsung , Intel , SK Hynix and other giants have successively competed for ASML's lithography machine equipment. Top EUV lithography machines may not be able to buy even if they have money. The limited production capacity has attracted giants. EUV lithography machines are necessary equipment for the production of high-end chips and are installed on 7nm, 5nm and other production lines by manufacturers such as TSMC and Samsung.

An EUV lithography machine is priced at US$120 million, equivalent to RMB 860 million. Therefore, EUV lithography machines have also become ASML's largest source of revenue. In addition, with the good shipment performance of other DUV lithography machines, ASML has delivered a brilliant financial report card.

According to data released by ASML, net sales of 5.8 billion euros in the third quarter, an increase of 400 million euros compared with the second quarter.

In addition, ASML's net income in the third quarter was 1.7 billion euros, with new orders set a record high of 8.9 billion euros. It is worth it that 3.8 billion euros of the new orders come from EUV lithography machines, including the next-generation High-NA system orders.

ASML expects sales in 2022 to be 21 billion euros, down from 22.4 billion euros in 2021. In terms of shipments, ASML shipped 80 lithography machines in the third quarter, which is similar to market expectations.

Overall, ASML's third-quarter financial report was quite impressive, especially the sales of new orders increased by 400 million euros compared with the previous quarter. This shows that ASML still has many orders waiting to be delivered.

However, ASML cannot be happy too early because TSMC's decision may make ASML anxious.

During TSMC's third-quarter financial report meeting, the company announced a 10% cut in capital expenditure this year, which means a reduction of US$4 billion in capital expenditure. After the reduction, the capital expenditure this year was set at US$36 billion.

TSMC is ASML's largest customer and contributes huge sales profits to ASML. Taiwan Province, where TSMC is headquartered, accounts for 40% of ASML's revenue. If TSMC reduces capital expenditure, it is likely to reduce the order volume of ASML lithography machines. ASML's sales from Taiwan Province will also decline accordingly.

The reason why TSMC cuts capital expenditure is mainly because the chip shortage has been alleviated. Customers are adjusting their inventory, resulting in TSMC no longer having the demand for chip foundry as strong as in the past.

, so it is normal to reduce expenditures, but this will probably affect the shipment performance of upstream suppliers such as ASML. Now ASML still has a lot of orders waiting for delivery, but it is hard to say whether there will be new orders inflow once the delivery is completed. The same is true for

including EUV lithography machines. TSMC plans to shut down several EUV lithography machines by the end of the year, and it is estimated that it will not purchase too many new equipment. How does

ASML respond to the decline in demand?

ASML is an important upstream lithography machine equipment supplier. Most chip manufacturing giants cannot do without ASML's EUV lithography machine. After all, only ASML can produce EUV lithography machine equipment, monopolizing 100% of the market share.

However, the market will not focus on high-end chips, and the most obvious decline in market demand happens to be concentrated on high-end chips. Shipping of many smartphones, computers and other consumer electronics declined in the first half of the year, allowing manufacturers to correct their chip production targets.

In such a market environment, how can ASML cope with the decline in demand? In fact, ASML is not without a backup plan, one of which includes the next generation of High-NA EUV lithography machine.

ASML confirms that it will deliver more advanced High-NA EUV lithography machines in 2023. From the pricing point of view, High-NA EUV lithography machines are about 3 times that of ordinary EUV lithography machines, which is equivalent to selling one can be worth three.

and ASML revealed that all EUV customers have submitted orders for High-NA EUV lithography machines. This shows that customers are very interested in the next generation of EUV lithography devices.

It should be known that the High-NA EUV lithography machine is mainly used to produce 2nm chips, which is an important guarantee for TSMC to mass produce 2nm in 2025.ASML can bet on the future with High-NA EUV lithography machines and win greater sales growth.

For the mainland Chinese market, ASML cannot ship EUV lithography machines freely. Therefore, ASML's focus is on DUV lithography machines. Unexpectedly, ASML has also achieved breakthroughs in DUV lithography machines. It delivered the NXT:2100i order for the first DUV in the third quarter, which increased the engraving accuracy by 20% compared with the previous generation products.

DUV lithography machine is the main equipment for mature processes. ASML can ship DUV lithography machines freely. I think it will not miss the opportunity to maintain strong demand for mature process chips.

was written at the end

ASML officially announced, achieving good sales performance in the third quarter. However, TSMC decided to reduce capital expenditures and intends to shut down several EUV lithography machines to save energy consumption. ASML either puts the new sales growth point on the High-NA EUV lithography machine or just lets it go.

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