According to an earlier report from Bloomberg, the Dutch government may restrict ASML’s after-sales services for Chinese customers. Regarding the matter, the Dutch Prime Minister Dick Schoof has stated that the government’s decisions will prioritize ASML’s actual interests to avoid jeopardizing its global position, according to a report by Reuters.

ASML derives about 20% of its total revenue from after-sales services. Per the same Reuters’ report, while Dick Schoof did not comment on rumors that Netherlands would put more curbs on ASML’s China chip business, he highlighted that negotiations are progressing smoothly.

Moreoever, the Dutch government is particularly focused on balancing ASML’s interests with other risks, as the authority has acknowledged that the economic interests are extremely crucial, he noted.

He reiterated that ASML represents an extremely important and innovative industry for the Netherlands and should not face any setbacks, as that would harm its global standing, according to Reuters.

ASML plays a crucial role in the global semiconductor supply chain, as the production of advanced chips heavily reliant on its lithography machines.

Per another Reuters report, in 2023, China became ASML’s second-largest market, accounting for 29% of its total revenue, following Taiwan. This surge in China’s market share was driven by a rush to purchase ASML’s DUV machines before stricter U.S. export restrictions took effect.

Due to U.S. government pressure, the export of the most advanced Extreme Ultraviolet (EUV) lithography machines to China has been banned.

Recently, ASML has expressed dissatisfaction with the Dutch government’s lack of support, with former CEO Peter Wennink even reportedly threatening to relocate the company’s headquarters if its development continues to be constrained.

Wennink has publicly opposed export restrictions to China, warning that such measures could stimulate China to develop new technologies and compete with ASML.

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• [News] ASML Might Not Be Able to Provide Advanced Chipmaking Maintenance Services to China as Early as 2025
• [News] ASML Claims the World Counts on China for Legacy Chips; So Do Chip Equipment Giants

(Photo credit: ASML)

China has turned itself into “the world’s market” for semiconductor, while it eyes to play a crucial role in chip manufacturing by procuring more equipment. The latest reports by Bloomberg and Technews, citing data from China’s General Administration of Customs, indicates that Chinese imports of chip equipment in the first seven months of 2024 hit a new high, totaling USD 26 billion.

It is worth noting that in July 2024, the Netherlands’ total exports to China exceeded USD 2 billion, reporting the second-highest single-month record ever, the reports say, which can be largely contributed to China’s stockpiling of ASML’s systems and other machinery.

Tightening U.S. Export Restrictions May Lead to China’s Import Surge with Mature Nodes Its Major Focus  

The primary reason behind this surge, according to Bloomberg, may likely be that Chinese tech companies are preparing for further export restrictions on advanced chip manufacturing tools launched by the U.S. and its allies.

The report states that Chinese tech companies are particularly focused on purchasing semiconductor equipment for mature process, from companies like ASML, Applied Materials, and Tokyo Electron. The move allows fabs in China to produce chips needed for local industries, primarily the automotive sector.

Most of the equipment was said to be lithography systems used for mature nodes, which are crucial for Chinese foundries like SMIC. The company is rumored to produce 5nm chips for Huawei this year, by using old deep ultraviolet (DUV) lithography machines purchased from ASML.

New Local Fabs Opening up, Driving China’s Chip Making Equipment Procurement

In addition to counter the possible export restrictions from the U.S., the reports state that China’s aggressive procurement may also be due to the expansion wave of fabs this year. According to SEMI’s projection, among the 42 new fabs expected to go online in 2024, China leads by 18, which further boosts the country’s purchase of semiconductor production equipment.

The momentum also drives demand for local semiconductor equipment manufacturers in China. Chinese semiconductor company Advanced Micro-Fabrication Equipment Inc. (AMEC) reported a strong second quarter, with its revenue up 36.46% year-on-year to RMB 3.448 billion. Its etching equipment revenue reached RMB 2.698 billion, a year-on-year increase of 56.68%.

Read more

• [News] ASML Claims the World Counts on China for Legacy Chips; So Do Chip Equipment Giants
• [News] Samsung and SK hynix’s China Revenue Doubled in 1H24, Reportedly Driven by Semiconductor and HBM Demand

(Photo credit: SMIC)

As semiconductor giants, including Intel, TSMC and Samsung, have been competing fiercely in the Angstrom era for advanced nodes, the progress on their adoption of ASML’s High-NA EUV (high-numerical aperture extreme ultraviolet) equipment has been brought back into spotlight lately. However, the semiconductor market, which seems to get more polarized in the meantime, may rely more on China than most people have imagined.

ASML: China is Ten Years behind the U.S. regarding Cutting-edge Chips

In May, without the assistance for extreme ultraviolet (EUV) lithography machines manufactured by ASML, China’s largest foundry, SMIC, is rumored to produce 5nm chips for Huawei this year. However, ASML’s CEO has denied the possibility that China would be able to replicate EUV technology.

According to an interview by Germany media Handelsblatt in July, ASML CEO Christophe Fouquet stated that the EUV technology, which the Dutch semiconductor heavyweight boasts of, is highly complex. Wccftech, citing Fouquet’s remarks in the interview, noted that it would be extremely difficult for China to replicate because the country lacks the know-how.

Citing Fouquet, the reports noted that regarding the development of cutting-edge chips, China is about ten years behind the U.S.

The World in Dire Need of the Legacy Chips Produced by China

However, Fouquet argued that chip buyers, including those in the German automotive industry, are in need of older generation computer chips, an area in which Chinese chipmakers are currently increasing their investments.

His remarks highlight the importance of China’s semiconductor production for global markets, which may still thrive under U.S. export restrictions.

According to the reports, Fouquet stated that though global demand for the legacy chips have been soaring dramatically, Europe cannot even meet half of its own needs. As manufacturing these chips is not very profitable, Western firms are not investing enough in the sector, Fouquet said.

Therefore, neither did he agree with the extensive, tightening chip controls recently. Fouquet noted that it doesn’t make sense to prevent someone from producing something you need.

Peter Wennink, former CEO of ASML, stated in July that the chip war between China and the US lacks factual basis and is entirely driven by ideology. Wennink also anticipated that this chip war will not be resolved anytime soon and could potentially persist for decades.

China Contributes up to 50% Revenue of the World’s Top 5 Chip Equipment Makers

Take a look at the latest financial results of the world’s top semiconductor equipment manufacturers, and we may find where the strong momentum of China has led to.

ASML, as the world’s exclusive EUV provider, reported second-quarter earnings and sales (USD 6.8 billion) that beat forecasts, as AI chips drives up demand for the Dutch firm’s critical semiconductor making equipment.

More importantly, regarding ASML’s sales in lithography units in the second quarter of 2024, China emerged as the largest market, as it contributed 49% of the revenue, higher than South Korea’s 28% and Taiwan’s 11%.

It is worth noting that a year ago, in the second quarter of 2023, China only accounted for 24% of ASML’s sales in lithography units, while Taiwan and South Korea contributed 34% and 27%, respectively. The results, in a way, have reflected China’s ambition and importance in chip making, as Fouquet noted.

Despite export controls, China has also become the largest market by region for U.S. semiconductor equipment giant, Applied Materials. In the second quarter, China accounted for 43% of its total sales of Applied Materials, a 22 percentage point increase YoY, while Taiwan and South Korea contributed 15% and 15%, respectively.

The dominance of the Chinese market is also evident with other major semiconductor equipment makers. China contributed 39% of Lam Research’s revenue in the June quarter, 2024, much higher than 26% a year ago.

Tokyo Electron, on the other hand, attributed as high as 49.9% revenue to China for the first quarter of its 2025 fiscal year, compared with 39.3% a year ago. China accounted for 44% of KLA’s revenue in the June quarter, 2024.

As DUV systems, which have not been extensively regulated, can still be applied to nodes down to 7nm, or even 5nm, Chinese chipmakers, with the support of government, may continue to hold a significant position in the global semiconductor ecosystem.

Read more

• [News] ASML Former CEO Predicts Chip War Between China and the US May Persist for Decades
• [News] US to Lobby Netherlands and Japan to Contain China’s Chip Development, Focusing on HBM

According to a report from South Korean media outlet BusinessKorea citing sources, Samsung Electronics is said to be planning to reduce its procurement of ASML’s next-generation Extreme Ultraviolet (EUV) lithography equipment. Additionally, their joint plan to build a research and development center in South Korea may also in limbo.

Reportedly, Samsung Electronics 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 and will reconsider the introduction of subsequent versions in the future.

This decision came after Vice Chairman Jun Young-hyun was appointed as the new head of the DS (Device Solutions) division and reviewed ongoing projects and investments.

Samsung and ASML’s strategic partnership originated from a visit in December last year, when President Yoon Suk Yeol led a delegation to ASML’s headquarters in the Netherlands. The delegation included representatives from South Korean semiconductor giants Samsung and SK hynix, according to the Korea Times.

During the visit, Samsung and ASML signed an MOU, agreeing to jointly invest approximately KRW 1 trillion (about USD 7.6 billion) to establish a research fab in South Korea.

However, with Samsung’s decision to reduce equipment introduction, the related process has been completely halted. It remains to be seen whether the joint research center will be established in another location or if the project itself will be canceled, pending future discussions.

Kyung Kye-hyun, who was the head of the DS division at the time and is now leading the Future Business Planning Team and SAIT (Samsung Advanced Institute of Technology), emphasized the importance of establishing a cooperative relationship through joint research for High NA EUV.

He noted that Samsung now has a technical priority for “High NA EUV” and mentioned that the company believes it has created an opportunity to utilize High NA EUV effectively in DRAM or logic semiconductors in the long term.

Despite the revised plans, as per Business Korea citing a Samsung Electronics official, it pointed out that there is no change in the plan to introduce ASML High NA EUV equipment and assured that the R&D center of the two companies will still be established in the optimal location.

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• [News] Samsung Reportedly to Bring in High-NA EUV Machine as soon as Year-End, as SK hynix Targets 2026
• [News] Samsung, ASML Invest KRW 1 Trillion in Korean Research Fab as Netherlands-Korea Semiconductor Alliance Formed

(Photo credit: 대한민국 대통령실)

As semiconductor giants, starting with Intel and TSMC, have been bringing in ASML’s High-NA EUV (high-numerical aperture extreme ultraviolet) equipment to accelerate the development in advanced nodes, the elite group has now reportedly been added two new members: Samsung and SK hynix.

According to the reports by Korean media outlet Sedaily and ZDNet, Samsung Electronics’ semiconductor (DS) division is said to bring in High-NA EUV equipment as early as the end of 2024. SK hynix’s High-NA equipment, which is expected to be applied to the mass production of advanced DRAM, will reportedly be introduced in 2026.

Samsung to Introduce First High-NA EUV Machine as soon as Year-End, Eyeing Full Commercialization by 2027

Sedaily, citing industry sources on August 13^th, notes that Samsung is expected to begin bringing in its first High-NA EUV equipment, ASML’s EXE:5000, between the end of this year and the first quarter of next year. It is worth noting that Samsung’s first High-NA EUV equipment is likely to be used for foundry operations, the report reveals.

Among the semiconductor heavyweights which have been advancing in the foundry business, Intel is the first to order new High-NA EUV machines from ASML. In May, Intel was said to have secured its first batch of the new High-NA EUV lithography equipment from ASML, which the company will allegedly use on its 18A (1.8nm) and 14A (1.4nm) nodes.

TSMC, on the other hand, is more concerned on the new machine’s expensiveness, as it might be priced at as much as EUR 350 million (roughly USD 380 million) per unit, according to a previous report by Bloomberg. However, the report, citing ASML’s spokesperson, confirmed that the Dutch chip equipment giant will ship High-NA EUV equipment to TSMC by the end of this year.

Now, following its two major rivals in the foundry sector, Samsung, by introducing High-NA EUV equipment as soon as year-end, aims to boost its competitive edge in the advanced nodes.

As the installation process is quite time-consuming, Samsung aims for the full commercialization of High-NA by 2027, supported by its efforts to build the related ecosystem, the report says.

According to the report, Samsung is working with electronic design automation (EDA) companies to design new types of masks, including curved (curvilinear) circuits for High-NA EUV that improve the sharpness of the printed circuits on wafers. This collaboration includes companies like Synopsys, a global leader in semiconductor EDA tools.

SK hynix’s High-NA EUV Reportedly to be Applied to 0a DRAM Production

According to the report by Sedaily, ASML has produced eight EXE:5000 High-NA EUV units currently, as Intel has the lion’s share by securing multiple units. Samsung is said to be the last customer to place the order for ASML’s first batch of units.

On the other hand, SK hynix, Samsung’s major rival in the memory sector, is reported to bring in ASML’s next generation of High-NA EUV machine, the EXE:5200, in 2026, ZDNet suggests.

Citing industry sources on August 16th, ZDNet notes that the HBM giant has been expanding the personnel dedicated to High-NA EUV development within the company.

Although specific plans, such as the fab where the equipment will be installed or the direction of additional investment, have not been disclosed, it is expected that the technology could be applied to mass production in 0a (single-digit nanometer) DRAM as early as possible, the report indicates.

Read more

• News] TSMC Reportedly Invests over USD 12.3 Billion in EUV, Advancing in 2nm Production
• [News] Intel Secures First Batch of High-NA EUV Equipment from ASML, Ahead of Samsung and SK Hynix

(Photo credit: ASML)