In 2022, ASML’s sales in China soared to a remarkable €2.9 billion , accounting for 13.8% of its annual revenue. At that time, Taiwan was an even more lucrative market for the company. Fast forward to 2023, and Taiwanese customers spent approximately €8.1 billion on lithography equipment from ASML, while their Chinese counterparts invested around €7.3 billion . Interestingly, in 2024, China emerged as ASML’s largest market, with total sales reaching €10.2 billion .
This Dutch company faces constraints when selling its advanced equipment to Chinese clients. While ASML cannot provide the latest extreme ultraviolet (EUV) or deep ultraviolet (DUV) lithography machines to China at present, it can still supply technology that enables the production of chips using older integration technologies. These semiconductors are primarily utilized in automobiles , home appliances , and various electronic devices , and are typically manufactured on nodes of 28 nm or less advanced technologies.
ASML Needs China, and China Still Needs ASML
Christophe Fouquet, the CEO of ASML, confronts a significant challenge ahead. Similar to his predecessor, Peter Wennink, he must safeguard the interests of his company. However, the tense relations between the United States and China complicate matters significantly. The sanctions imposed by the U.S. and the Netherlands restrict ASML from selling its most advanced lithography machines to Chinese customers and even limit its capacity to offer maintenance and after-sales services.
For the Netherlands, 2024 will be remembered as the year when tensions between ASML and the Dutch government reached new heights. Christophe Fouquet firmly believes that the United States will continue to pressure its allies to tighten the sanctions aimed at stifling the development of the Chinese integrated circuit industry. According to the British weekly, The Economist, he argues that European politicians and regulators should do more to support ASML in this challenging environment.
In 2024, China solidified its position as ASML’s largest market, achieving total sales of €10.2 billion.
Regardless, the numbers mentioned earlier offer a clear insight into how ASML is navigating the prohibitions imposed by the U.S. and supported by the Dutch government, which could considerably degrade its business. As noted, in 2024, China emerged as ASML’s largest market with total sales amounting to €10.2 billion . This success can be attributed to Chinese integrated circuit manufacturers purchasing a significant volume of lithography equipment suitable for producing mature semiconductors.
This Dutch company has far more advanced chip manufacturing machines, such as the EUV and DUV equipment mentioned earlier. Notably, it possesses the highly sophisticated high-NA EUV machines designed to optimize the production of integrated circuits at nodes below 2 nm . While ASML is currently barred from delivering these machines to its Chinese clients, it’s crucial to note that the company holds an effective monopoly on both EUV and high-NA EUV machines . No other company has the resources necessary to produce such complex equipment.
Currently, industry giants like TSMC , Intel , Samsung , GlobalFoundries , Micron Technology , and SK Hynix are either building new chip manufacturing plants or expanding existing ones. What they all have in common is their reliance on purchasing EUV and DUV equipment from ASML. Moreover, TSMC, Intel, and Samsung are expected to acquire a substantial number of high-NA EUV machines over the next three years.
It is evident that even amid the current challenging context, it is difficult to displace ASML. For now, their business in China is holding strong , and it is likely to continue doing so until Chinese lithography equipment manufacturers develop their own EUV machines. Furthermore, outside of China, ASML faces no competition in its portfolio of EUV machines, highlighting its true strength in the market.
Image | ASML
For more information, see The New York Times.
In a landscape where technology and geopolitics intersect, ASML’s position remains pivotal. The company’s ability to innovate and navigate international challenges will determine its future trajectory, reaffirming its status as a leader in semiconductor manufacturing technology.