The leading Dutch semiconductor equipment company ASML has reportedly predicted continued strong demand from Chinese customers, with approximately 20% of the company’s backlog attributed to them.

According to reports from Reuters and CNBC, ASML CEO Peter Wennink stated during the first-quarter (January-March) earnings call on April 17th that discussions are ongoing between the Dutch and U.S. governments regarding national security concerns.

In October 2023, the U.S. Department of Commerce expanded its export control regulations on China, with the new provisions taking effect from November 2023.

These regulations specifically restrict the Dutch company ASML from selling certain immersion Deep Ultraviolet (DUV) lithography equipment to Chinese facilities engaged in advanced semiconductor manufacturing. Consequently, Chinese customers turned to purchasing mature process equipment in large quantities, leading to nearly 2 consecutive months of surge in China’s equipment import at that time.

As per information disclosed by ASML during its earnings call, it is currently able to continue serving Chinese customers who have already installed its equipment.

ASML’s CFO Roger Dassen further indicated that Chinese customers account for approximately 20% of the company’s backlog orders. He noted that Chinese chip manufacturers are expanding their production for mature processes, with these chips falling outside the export restrictions of the United States and its allies, primarily used in appliances like refrigerators, phones, toys, and automobiles.

Dassen noted that demand from China is robust due to their expansion of production capacity. As a result, China’s global market share is expected to grow larger in the coming years, leading to increased self-sufficiency compared to the present.

Per ASML’s financial report, during Q1, machine revenue from the Taiwan and South Korean markets decreased from the previous quarter’s 13% and 25% to 6% and 19%, respectively. In contrast, machine revenue from the Chinese market increased significantly from 39% to 49%.

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(Photo credit: ASML)

Despite Western chip equipment export bans, China reportedly has imported 32 lithography systems from the Netherlands in Jan-Feb 2024, marking a 256.1% YoY growth.

According to China Customs data, Jan-Feb 2024 imports from the Netherlands totaled USD 1.057 billion, up 256.1% YoY, but down 44.8% QoQ, with 32 systems imported. January saw USD 666 million imports, up 522% YoY, down 41% QoQ, with 20 systems; February recorded USD 390 million imports, up 105.9% YoY, down 41.4% QoQ, with 12 systems.

From the data, it’s evident that in 2024, China’s imports of lithography systems from the Netherlands saw significant growth compared to the same period last year, but a noticeable decline from the previous quarter. In the first two months, China’s imports of exposure machines from the Netherlands decreased by 44.8% compared to December last year.

Per a report from IJIWEI, the average price of lithography systems imported from the Netherlands to China has increased from USD 10 million per unit since May last year to USD 30 million per unit. As of the first two months of 2024, the average price remains above USD 30 million.

According to a report by China’s Media outlet ICsmart, in terms of imports based on domestic registration locations, from January to February 2024, a total of 9 provinces and cities imported lithography systems. The top 5 importers were Shanghai (USD 303 million), Beijing (USD 145 million), Shandong (USD 131 million), Sichuan (USD 131 million), and Guangdong (USD 117 million), accounting for 28.7%, 13.8%, 12.4%, 12.4%, and 11.1% respectively, totaling 78.4%.

In June 2023, the Netherlands announced restrictions on the export of chip manufacturing equipment. According to relevant export regulations, it became difficult for Chinese companies to obtain export licenses starting from January 1, 2024.

Thus, since the second half of 2023, there has been explosive growth in the amount of exposure machines imported from the Netherlands. As per a previous report from South China Morning Post, in November 2023, China witnessed a remarkable 1050% surge in the import value of crucial chip manufacturing lithography equipment from the Netherlands.

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(Photo credit: ASML)

Dutch semiconductor equipment leader ASML Holding N.V. has announced that export licenses for certain equipment have been partially revoked by the Dutch government.

In a press release issued on January 1st, 2024, ASML stated, “A license for the shipment of NXT:2050i and NXT:2100i lithography systems in 2023 has recently been partially revoked by the Dutch government, impacting a small number of customers in China. We do not expect the current revocation of our export license or the latest U.S. export control restrictions to have a material impact on our financial outlook for 2023.”

The press release further stated, “In recent discussions with the US government, ASML has obtained further clarification of the scope and impact of the US export control regulations. The latest US export rules (published October 17, 2023) impose restrictions on certain mid critical DUV immersion lithography systems for a limited number of advanced production facilities.”

Bloomberg reported earlier on January 1^st, 2024, citing unnamed sources, that several weeks before the implementation of export controls on advanced semiconductor equipment in the Netherlands, the U.S. government had requested ASML to cancel the export of certain machines destined for China.

Previously, ASML’s CEO, Peter Wennink, stated that these limitations would exclude the vast majority of Chinese customers in response to the U.S. restrictions. This exclusion is due to the fact that these customers are involved in mature nodes, specifically in the production of semiconductors at 28nm and above.

In addition, last week, the South China Morning Post has cited data, indicating that in November 2023, China had imported critical semiconductor manufacturing lithography equipment from the Netherlands, experiencing a significant surge of 1050% in import value.

In an interview with the South China Morning Post, Jan-Peter Kleinhans, Senior Researcher and Head of Technology and Geopolitics Projects at the Berlin-based think tank “Stiftung Neue Verantwortung” (New Responsibility Foundation), mentioned that the impact on sales would not be immediate following the new U.S. restrictions.

Reportedly, this is because ASML has a lead time of approximately 18 months. This implies that the equipment shipped in the fourth quarter of 2023 would have been ordered in the second or third quarter of 2022, and ASML would apply for export licenses at some point thereafter.

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(Photo credit: ASML)

In November 2023, China witnessed a remarkable 1050% surge in the import value of crucial chip manufacturing lithography equipment from the Netherlands, the primary exporter of photolithography equipment, according to the South China Morning Post.

This surge, measured in terms of value, indicates that Chinese semiconductor companies have managed to maintain a channel for ordering advanced equipment despite the tightened export restrictions imposed by the United States

Lithography equipment holds a paramount position among the ten types of equipment essential in the manufacturing process of integrated circuits (ICs).

Reportedly, despite substantial financial investments, China has been acknowledged to lag behind in this technology for many years. Despite allocating significant funds, the country has still struggled to narrow the gap with leading enterprises in this crucial aspect of IC manufacturing.

Meanwhile, in October, the U.S. Department of Commerce expanded its export control regulations on China, with the new provisions taking effect from November 2023.

These regulations specifically restrict the Dutch company ASML from selling certain immersion Deep Ultraviolet (DUV) lithography equipment to Chinese facilities engaged in advanced semiconductor manufacturing. Consequently, China’s import of equipment has seen a consecutive surge for nearly two months.

In November, China imported 16 lithography equipment units from the Netherlands, valued at USD 762.7 Million, marking a tenfold year-on-year increase. By comparison, in October, China imported 21 lithography equipment units valued at USD 672.5 million, with an average price difference of 46% per unit.

In November of this year, China imported a total of 42 lithography equipment, valued at USD 816.8 million, including 15 units from Japan. When combined, the imports from the Netherlands and Japan accounted for almost the entire amount spent by China on lithography equipment in November.

In response to the U.S. restrictions, ASML’s CEO, Peter Wennink, previously stated that these limitations would exclude the vast majority of Chinese customers. This exclusion is due to the fact that these customers are involved in mature or traditional semiconductor manufacturing, specifically in the production of semiconductors at 28nm and above.

Jan-Peter Kleinhans, Senior Researcher and Head of Technology and Geopolitics Projects at the Berlin-based think tank “Stiftung Neue Verantwortung” (New Responsibility Foundation), mentioned that the impact on sales would not be immediate following the new U.S. restrictions.

As per the report from South China Morning Post, this is because ASML has a lead time of approximately 18 months. This implies that the equipment shipped in the fourth quarter of 2023 would have been ordered in the second or third quarter of 2022, and ASML would apply for export licenses at some point thereafter.

Read more

• [News] EUV as a Strategic Asset in the Most Advanced Processes: Progress in Intel/TSMC/Samsung’s Adoptions
• [News] Reports of SMEE Successfully Developing 28nm Lithography Machine, Original Source Deleted Shortly After

(Photo credit: ASML)