2023-04-21 03:58:00
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Alexey Razin
The opening season of quarterly reports gave an idea of how lithographic equipment suppliers expect to develop their business in China, taking into account the aggravating sanctions from both the United States and the Netherlands and Japan. At least, major representatives of the first two countries believe that this year they will even increase their revenue in the Chinese market.
Image Source: ASML
Agency Archyde.com analyzes the statements of two industry representatives whose activities are completely limited by changes in the export control rules of the United States and the Netherlands adopted since October. We are talking regarding the companies Lam Research (USA) and ASML (Netherlands), which are major players in the global market for lithographic equipment and receive a significant part of their revenue in China. At this stage, restrictions imposed by the US and Dutch authorities on Chinese customers of companies apply mainly to advanced equipment that allows you to create chips that are in demand in the defense industry.
Chinese clients of Lam Research and ASML, according to company representatives, buy mainly equipment used to produce chips according to more mature technical processes. The components produced on it are used in electric vehicles, smartphones and personal computers. Lam Research initially estimated the likely damage from anti-China sanctions at up to $2.5 billion in lost revenue for the full year of 2023 last fall. After receiving clarification from US officials on the nature of the restrictions being imposed, she revised her forecast upwards and added that she might sell several hundred million US dollars worth of equipment in China, which she had previously mistakenly considered to be subject to sanctions.
Lam Research has already received regarding $500 million in upfront payments, mostly from new clients. Of these, a “significant part” is related to China, as company representatives explained.
In the case of ASML, as noted this week, the order book has grown to 39 billion euros, which would be enough for the company to operate for two years. Of this volume, Chinese customers are responsible for approximately 30% of orders. This is significantly higher than observed in November, when Chinese customers generated up to 18% of orders out of a total of 38 billion euros. According to ASML management, the bulk of Chinese customers are content with mature lithography and aim to produce chips for the electric vehicle industry, which is now booming in China and requires significantly more components than ICE cars.
When new restrictions from the Dutch authorities come into force this year, ASML will be forced to stop deliveries of deep ultraviolet (DUV) immersion lithography (DUV) equipment to the PRC. It is not considered to be at the forefront of the brand’s product range, but each scanner costs tens of millions of euros and is an important source of revenue for the company. ASML expects to implement 93 such systems this year.
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