Tech war: strong China demand for chip tools bolsters revenue at Lam Research and ASML despite US trade sanctions

China’s strong demand for chip-making tools bolstered revenue at Lam Research and ASML in 2023 despite the imposition of tough US trade sanctions, according to the latest financial results from the semiconductor firms.

US etching and deposition tool giant Lam Research saw sales to mainland China contribute 40 per cent of its total revenue of US$3.76 billion in the December quarter, ahead of South Korea with a 19 per cent share and Japan with 14 per cent.

The contribution from China to Lam Research’s revenue came in at 48 per cent during the September quarter and 26 per cent in the June quarter last year. In the March quarter, the mainland and South Korean markets each accounted for 22 per cent of revenue, according to Lam Research’s financial statements.

Meanwhile, Netherlands-based ASML, the world’s top lithography system maker, saw China-bound shipments make up 39 per cent of its total system revenue of 5.7 billion euros (US$6.2 billion) during the December quarter, ahead of Taiwan, Japan, and South Korea. This was slightly down from a China contribution of 46 per cent in the third quarter, according to results published this week.

China demand has proven resilient despite over a year of intensified US sanctions that aimed to cut off the country’s access to advanced semiconductor equipment on national security grounds.

Foreign-owned chip foundries may also have contributed to strong demand on the mainland due to several large manufacturing bases there. Taiwan Semiconductor Manufacturing Co, the world’s top contract chip maker, and South Korean memory chip makers Samsung Electronics and SK Hynix, have been granted waivers to import equipment for their mainland-based foundries since US sanctions were issued in October 2022.