Dutch lithography gear giant ASML expects steady China sales in 2023 despite US pressure on export curbs

ASML still sends older deep ultraviolet lithography machines to China, although these are now a focus of the US-Dutch talks
CEO Peter Wennink says the first effect of the US rules was to push Chinese chip makers to invest in capacity, albeit to make slightly less sophisticated chips

Semiconductors

Reuters

Published: 12:00pm, 26 Jan, 2023

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ASML Holding’s exports to mainland China is likely to hold at last year’s level in 2023 despite ongoing US-Dutch government talks over new restrictions on the company’s sales to the country, CEO Peter Wennink said on Wednesday.

ASML, which dominates the market for machines used in one step of the chip-making process, was restricted from selling its most advanced extreme ultraviolet (EUV) machines to Chinese customers in 2019 following US pressure, due to fears they could be used to make chips that have military applications.

The company still sends older deep ultraviolet (DUV) machines to China, although these are now a focus of the US-Dutch talks. Such sales totalled around 2.16 billion euros (US$2.35 billion), or 14 per cent of total revenue, last year, down marginally from 2.17 billion euros in 2021.

Peter Wennink, president and CEO of Dutch chip machine maker ASML poses after announcing fourth-quarter results in Veldhoven, Netherlands on Wednesday. Photo: Reuters

In an interview with Reuters following the company’s fourth quarter earnings, Wennink said he expected sales to China to be “about the same” this year, adding that orders from Chinese firms make up about 15 per cent of the company’s 40 billion euro order backlog.

The EUV machines account for 50 per cent of ASML’s sales, Wennink said, noting that the company’s US peers such as Lam Research and Applied Materials had not had similar restrictions imposed on their own sales to China until Washington announced sweeping new measures in October in a bid to hobble Beijing’s chip-making ability.

After a meeting with US President Joe Biden last week, Dutch Prime Minister Mark Rutte signalled that while the Netherlands is aligned with the US on security policy, it will not simply adopt the new restrictions.

China is the world’s biggest consumer of computer chips and Wennink said the first effect of the US rules was to push local chip makers to invest in capacity, albeit to make slightly less sophisticated chips.

“They just become very practical,” he said, adding that Chinese customers are investing in 20 nanometre chips and larger - those considered cutting edge before the year 2014.

“This is an area where there is massive shortage.”

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