Following recent downward revisions in annual financial targets by semiconductor lithography equipment manufacturers ASML and Canon, Nikon has also announced a cut to its forecast.

According to a press release from Nikon, the company expects its 2024 performance to fall short of initial plans due to delays in the recovery of market conditions within its Precision Equipment Business and Components Business, resulting in lower-than-expected demand and postponed sales of certain products.

Nikon has also revised its consolidated financial forecast for the year ending March 31, 2025, citing a delayed recovery in semiconductor-related markets as the reason for adjusting its sales plans in the lithography system sector. However, sales in the Imaging Products Business are anticipated to align with projections.

Notably, IC Smart reported that ASML revealed its Q3 financial results on October 15, reporting sales and gross margins in line with expectations. However, new orders plummeted by 53% quarter-over-quarter, falling short of half the market’s expectations. ASML has also lowered its 2025 sales target from a previously estimated range of €30 to €40 billion down to €30 to €35 billion, attributing the slowdown to a lagging recovery in most markets, with certain fabs delaying their demand for lithography systems, particularly EUV systems, despite strong demand in the AI sector.

The same IC Smart report noted that on October 24, Canon announced record high revenues for Q3 2024 (July to September) but also lowered its full-year performance expectations. Revenue was revised down from an initial estimate of ¥4.6 trillion to ¥4.54 trillion, while operating profit was adjusted from ¥465 billion to ¥455.5 billion. The net income target was cut from ¥335 billion to ¥325 billion, with Canon attributing this to an increase in the yen’s exchange rate. Additionally, the company has reduced its sales target for semiconductor lithography machines from 244 units to 239 units for the current fiscal year.

(Photo credit: ASML)

Netherlands-based chip equipment maker ASML recently announced a reduction in orders for its 2025 forecast, leading to a sharp decline in its shares. The industry is concerned about ASML’s revenue from China.

According to Wccftech, ASML’s CEO Christophe Fouquet mentioned that China’s typical demand accounts for about 20% of ASML’s sales, and he expects that demand will eventually return to those levels in 2025.

He further stated that demand from China is primarily focused on legacy chips based on older-generation technology.

Notably,  Fouquet claims that China may be able to produce some chips at 5nm and 3nm nodes, albeit in limited capacity and using older DUV lithography technology, according to the report from Wccftech.

Whether China has the capability to produce chips at advanced nodes has recently come under scrutiny. Fouquet’s assertion follows reports that Xiaomi has purportedly completed the tape-out of its first 3nm SoC, which might be launched next year, according to the report from Wccftech. This reported innovation in China could assist Huawei’s HiSilicon and other sanctioned Chinese firms in improving their chip design

On the other hand, according to the report from Reuters, Fouquet believes that the U.S. export restrictions will persist regardless of who wins the presidential election.

According to the report from Reuters, Fouquet mentioned that the Netherlands and Europe are debating whether further export restrictions are for national security concerns or trade policy, and whether they would even be effective. He mentioned that even American companies are also thinking about whether these regulatory measures bring benefits or harm.

ASML’s revenue decline is not entirely influenced by China, as the downturn is also attributed to the underwhelming performance of ASML’s major clients, including tech giants Intel and Samsung, according to the report from Wccftech.

According to its press release, ASML revised its total net sales forecast for 2025 to a range of €30 billion to €35 billion, down from its previous estimate of up to €40 billion. Additionally, it reported third-quarter bookings of €2.6 billion, which fell short of the average analyst estimate.

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• [News] ASML Reports Disappointing Q3 Bookings while Lowering 2025 Forecast, Raising Concerns in Chip Sector

(Photo credit: ASML)

As ASML accidentally released its financial report nearly a day ahead of its schedule due to a “technical error,” the Dutch semiconductor giant’s Q3 performance and its forecast for 2025 have also startled all by reporting orders at half of what the market predicted, raising concerns on the lackluster outlook of semiconductors despite strong demand for AI-related chips, according to the reports by Bloomberg and Reuters.

The result is regarded as a warning signal, as it might imply the weak performance for ASML’s major clients, such as tech heavyweights Intel and Samsung, the reports note. TSMC, another of ASML’s client, will release its Q3 earnings results tomorrow.

ASML shares plummeted 16%, marking their largest drop since June, 1998, the reports by Reuters and Bloomberg state.

Lackluster Q3 Bookings and 2025 Outlook as Customers Remain Cautious

ASML, known for producing the world’s most advanced chipmaking equipment such as High-NA EUV machines, posted a net profit of 2.1 billion euros on revenue of 7.5 billion euros (USD 8.2 billion) in Q3. However, it reported third-quarter bookings of €2.6 billion (USD 2.8 billion), falling short of the average estimate of €5.39 billion from analysts surveyed, according to Bloomberg.

According to its press release, ASML revised its 2025 total net sales forecast to a range of €30 billion to €35 billion, down from its previous estimate of up to €40 billion.

For next year, the company anticipates a gross margin between 51% and 53%, lower than the prior projection of 54% to 56%, mainly due to delays in the rollout of its high-end extreme ultraviolet machines.

According to a statement by ASML Chief Executive Officer Christophe Fouquet cited by the reports, the recovery of the semiconductor industry is progressing more slowly than anticipated, and this cautious outlook is expected to persist into 2025, leading to more conservative behavior from customers.

Key Clients in Trouble while Chip War Remains an Issue

It is worth noting that according to Reuters, ASML indicates that despite strong demand for AI-related chips, other segments of the semiconductor market are facing prolonged weakness. This has caused logic chip manufacturers to postpone orders, while memory chip companies are only planning “limited” expansions in new capacity.

According to a report from South Korean media outlet Business Korea, Samsung is said to mull to reduce its procurement of ASML’s next-generation EUV lithography equipment. Reportedly, Samsung initially planned to purchase more than three units of the next versions, EXE:5200, EXE:5400, and EXE:5600, over the next ten years. However, the company has now decided to introduce only the EXE:5200.

On the other hand, another struggling semiconductor giant, Intel, has secured five units of High-NA EUV machines from ASML to ensure its progress with the 2nm node, according to a previous report by TheElec. However, as the company has been doing its best to reduce expenses through restructuring and delaying overseas expansion, whether it will stick to the original purchase plan remains to be seen.

The report by Bloomberg also warns that while China was ASML’s largest market, the demand from China may slow in the coming periods, as Washington’s ongoing chip war with Beijing remains a persistent long-term concern for ASML.

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• [News] Intel Completes Assembly of Second High-NA EUV System, ASML Confirms
• [News] Samsung Reportedly Reduces Procurement of ASML’s Next-Generation EUV Lithography Equipment

(Photo credit: ASML)

According to a report from TechNews, Christophe Fouquet, the CEO of ASML, announced that Intel’s second high-NA EUV system has been completely assembled.

Christophe Fouquet stated that the High-NA EUV machine is less likely to face delivery delays compared to the current standard EUV machines because it can be assembled directly at the customer’s facility, eliminating the need for disassembly and reassembly. This approach saves both time and costs for ASML and its customers, helping to expedite delivery, the report noted.

Mark Phillips, the Director of Lithography Hardware at Intel, announced that the company has successfully completed the installation of two High-NA EUV systems at its Portland facility.

Moreover, Mark Phillips highlighted that the improvements offered by High-NA EUV machines surpass expectations when compared to standard EUV machines.

Mark Phillips also noted that the installation of the second High-NA EUV system was completed even faster than the first. He stated that all necessary infrastructure for the High-NA EUV system is in place, and inspections of the masks used for High-NA EUV have begun as scheduled. As a result, Intel is well-positioned to move into production with minimal additional effort.

Additionally, Mark Phillips was asked about the issue of CAR (Chemically Amplified Resist) versus metal oxide resists. According to the report by TechNews, he stated that while CAR is currently sufficient, there may be a need for metal oxide photoresists at some point in the future. Intel aims to have its Intel 14A process in mass production by 2026-2027, at which point further advancements in the node will be made.

Intel’s early adoption of ASML’s High-NA EUV equipment is seen by many as a crucial move for Intel to reclaim its technological leadership.

Regarding other semiconductor giants, ASML previously confirmed that it will deliver its latest High-NA EUV systems to TSMC by the end of this year. According to a report from the Economic Daily News, it is rumored that TSMC’s first High-NA EUV equipment arrived in September, which will support the company in advancing its process technology.

On the other hand, while Samsung has also decided to purchase ASML’s High-NA EUV equipment, a report from South Korean media outlet BusinessKorea suggests that the company is planning to reduce its procurement of ASML’s next-generation EUV lithography equipment, after Vice Chairman Jun Young-hyun was appointed as the new head of the DS (Device Solutions) division and reviewed ongoing projects and investments.

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• [News] TSMC Strengthens Its Advanced Process with Next-Generation EUV Equipment Reportedly Arriving This Month
• [News] Samsung Reportedly Reduces Procurement of ASML’s Next-Generation EUV Lithography Equipment

(Photo credit: ASML)

Has the new semiconductor manufacturing equipment capable of rivaling ASML’s EUV lithography machines been shipped? Canon has announced that it will deliver its latest lithography platform, the FPA-1200NZ2C nanoimprint lithography (NIL) system for semiconductor manufacturing, to the Texas Institute for Electronics (TIE), a semiconductor consortium based in Texas, according to its press release.

It is worth noting that in October, 2023, the Japanese tech giant became the first company in the world to commercialize a semiconductor manufacturing system utilizing NIL technology, which creates circuit patterns using a different approach than traditional projection exposure technology, the press release notes. Now it has officially sealed the deal with a new client.

Canon states that with reduced power consumption and cost, NIL lithography equipment enables patterning with a minimum linewidth of 14 nm, equivalent to the 5 nm node that is required to produce most advanced logic semiconductors currently available. In addition to producing 5 nm logic chips, with further improvements, it is expected to be capable of manufacturing 2 nm products as well.

Citing an interview with Kazunori Iwamoto, Deputy General Manager of Canon’s Optical Equipment Division by Nikkei, a report by MoneyDJ notes that Canon aims to sell “a dozen units each year within 3 to 5 years”.

According to Canon’s explanation, in contrast to conventional photolithography equipment, which transfers a circuit pattern by projecting it onto the resist coated wafer, the new product does it by pressing a mask imprinted with the circuit pattern into the resist on the wafer like a stamp.

Because its circuit pattern transfer process does not go through an optical mechanism, fine circuit patterns on the mask can be faithfully reproduced on the wafer.

According to MoneyDJ, Canon has been collaborating with Japan’s major mask manufacturers, Dai Nippon Printing (DNP) and Kioxia, which was still Toshiba’s subsidiary at that time, to develop NIL technology for the past decade.

Citing Canon CEO Fujio Mitarai’s previous remarks with the Japan Times in 2023, MoneyDJ notes that Canon’s NIL technology provides small semiconductor manufacturers with the opportunity to produce advanced chips that are currently dominated by large corporations, with the price probably be “one digit less” than ASML’s extreme ultraviolet (EUV) lithography systems.

According to Mitarai, the power consumption of NIL equipment is only one-tenth that of EUV machines. While NIL may be difficult to replace EUV, he believes it will create new opportunities and demand, and many customers have already expressed interest.

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• [News] Canon’s Nano-imprint Lithography Reduces Production Costs for Advanced Processes, Narrowing the Gap with ASML

(Photo credit: Canon)