Despite recent advances, ASML CEO highlights China’s significant technological gap in semiconductor manufacturing. Chinese firms face major hurdles without access to crucial EUV technology, even as they represent nearly half of ASML’s current sales amid growing geopolitical tensions.
ASML’s CEO, Christophe Fouquet, has said that Chinese semiconductor companies like Huawei and SMIC are still a good 10 to 15 years behind big players like Intel, TSMC, and Samsung, despite making notable strides in technology. This comes as ASML’s ties with Chinese customers are under increasing scrutiny, thanks to growing geopolitical tensions.
According to Fouquet, the big issue is that Chinese manufacturers don’t have access to advanced extreme ultraviolet (EUV) lithography machines, which play a huge role in keeping up with global leaders. ASML’s EUV systems, priced at roughly 400 million euros apiece, are key for churning out state-of-the-art semiconductors—and just shipping the components requires seven cargo planes.
Despite challenges, the Dutch lithography powerhouse reported strong numbers for Q3 2024, boasting net sales of 7.5 billion euros and profits of 2.1 billion euros. However, new orders fell to 2.6 billion euros, which is less than half of the previous quarter’s 5.6 billion euros. Even so, China still dominates ASML’s market share, accounting for 47 percent of the company’s Q3 2024 sales.
Analysts at UBS predict ASML could see a nearly 25 percent dip in its Chinese sales next year, with up to 45 percent of its total Chinese revenue on the line if more restrictions pile on. While the U.S. is pressing ASML to stop servicing equipment already in use in China, the Netherlands hasn’t complied with these requests so far.
To add some perspective, ASML and its partners spent over two decades perfecting the commercial EUV ecosystem. Even as Huawei and its collaborators are trying to develop their own EUV systems, experts think it’d take just as long to set up a similar ecosystem—maybe even with access to some older tech that’s already been developed. Notebook Check