ASML chip-making equipment sales fall as China rushes to secure tools - South China Morning Post

ASML Holding’s order intake plunged in the third quarter amid a sector-wide slump in the semiconductor industry, helping propel sales in China to nearly half of its revenue in the period.

Order bookings fell 42 per cent to €2.6 billion (US$2.8 billion) in July through September from the previous quarter, Europe’s most valuable technology company said in a statement on Wednesday. That compares with an average estimate of €4.5 billion among analysts polled by Bloomberg.

While ASML maintains a sizeable order backlog, the semiconductor industry has been experiencing a slowdown after inflation and recession fears hit consumer spending. Sales at Taiwan Semiconductor Manufacturing Co, ASML’s biggest customer, dropped 11 per cent in the third quarter, according to Bloomberg calculations. Earlier this year, ASML said it plans to slow hiring amid the downturn.

“The macroeconomic situation has not improved,” chief executive officer Peter Wennink said in a video interview on the results. “We still see relatively high inflation rates, high interest rates, some fear of recession in Europe, in the US,” he said. “The geopolitical environment is also difficult from time to time.”

Chinese chip makers can still access critical ASML equipment for four months

ASML, which is the only producer of the lithography equipment needed to make the most advanced semiconductors, has experienced a jump in business from China this year as chip makers there boosted orders ahead of looming export controls.

China accounted for 46 per cent of ASML’s sales in the third quarter, compared to 24 per cent in the previous quarter and 8 per cent in January to March.

“Our Chinese customers say: We are happy to take the machines that others don’t want,” Wennink said. “Because their fabs are ready. They can take the tools.”

ASML has been targeted by the US effort to curb exports of cutting-edge technology to China, one of the Veldhoven-based company’s biggest markets. Earlier this year, US President Joe Biden’s administration convinced the Dutch government to prevent ASML from shipping some immersion deep ultraviolet lithography machines, its second-most advanced product line, to China without a license. The Dutch restrictions are set to take full effect from January 1.

The US announced additional export curbs on Tuesday that are designed to block China’s access to advanced semiconductor technology. ASML said the new measures will hit its sales there in the medium to long term.

ASML is already barred from selling its most advanced equipment, known as extreme ultraviolet machines, to China. The firm says it doesn’t expect the Dutch and US measures to have a material impact on its financial outlook for the year or in the longer term.

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