[News] Overview of the Latest Financial Reports from the Top Five Equipment Giants Amid the Intense US-China Tech War

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The world’s top five semiconductor equipment manufacturers have released their latest financial reports, signaling a surge in demand for advanced manufacturing equipment and positive signs of industry recovery.

The US has continuously thwarted efforts by equipment suppliers to export advanced machinery to China—citing national security concerns—mid its ongoing tech conflict. How have companies like Applied Materials, ASML, TEL, Lam Research, and KLA been impacted by the US’s stringent export controls on China?

Applied Materials

Applied Materials reported US$6.71B in 1Q24 earnings—marking a less than 1% decline in revenue. The Chinese market, doubling its revenue to $3B last quarter, emerged as a bright spot, jumping from a 17% share a year ago to 45%.

This surge is primarily due to China’s urgent push to build capacity for internet devices, telecommunications, automotive, power, and sensors. Despite not expecting to maintain the current growth rate, Applied Materials believes the continued demand for more chips will drive market development.

ASML

ASML, seen as a weathervane for the industry, reported 4Q23 net sales of €7.2B, up from €6.7B in Q3. With annual sales reaching €27.6B in 2023 and a 26.3% sales share in China, ASML has surpassed South Korea to become its second-largest market.

However, ASML warns that geopolitical tensions and potential US export control expansions to China remain operational risks. The company estimates that US and Dutch export controls could reduce its sales of mid-range DUV equipment to China by about 10–15% this year.

TEL

TEL posted 3Q24 revenues of ¥463.6B, with China accounting for 46.9% of its revenue, a 42.8% QoQ increase. TEL expects continued strong demand from China, noting that the country produces only a small portion of the chips it needs and will actively invest to reduce reliance on foreign technology. This momentum is expected to continue into 2025.

Lam Research

Lam Research saw a 7.9% QoQ increase in 2Q24 revenue to $3.76B, with the share of revenue from the Chinese market decreasing from 48% to 40%. With the semiconductor industry expected to grow robustly in the coming years, driven by innovations like AI, Lam Research is poised to benefit.

The company expects equipment expenditures by DRAM manufacturers to grow due to increased HBM production and process transitions, while NAND manufacturers’ expenditures will strengthen with technological upgrades.

KLA

KLA reported a 16.7% YoY decrease in 2Q24 revenue to $2.487B, with China remaining its largest revenue contributor, though its share dropped from 43% in Q1 to 41%. KLA estimates a mid-point revenue of $2.3B for this quarter.

The demand for wafer fabrication equipment is expected to reach the higher end of the $80B range in 2024, with the second half of the year anticipated to outperform the first.

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