CEO of lithography machine giant ASML: Europe does not have enough chips of its own, and it is wrong to worry about China's competition
On January 24, local time, Peter Wennink, CEO of Dutch lithography giant ASML, said in an interview that Europe will not be able to achieve the goal of increasing the global computer chip market share to 20% by 2030 due to the slow pace of production capacity building. He also pointed out that as the world's second largest economy and the largest industrial country, China's demand for chips is almost bottomless, and the concern about the so-called excessive investment in the chip industry by China is wrong.
On January 24, ASML CEO Wennink announced the company's financial results for the full year and fourth quarter of last year
European chip production capacity is "simply not enough"
Wennink spoke to the media after ASML announced its earnings on the same day. He said frankly about the chip targets set by the European Union: "This is completely unrealistic. Wennink predicts that Europe's share of the global computer chip market is "up to 8%". "If you want to get to 20 percent, you just have to calculate how much you need to produce here to see the result. ”
According to the European Chips Act, which came into effect in September last year, the EU will raise 43 billion euros in public and private funds (of which 3.3 billion euros will come from the EU budget), with the goal of doubling the EU's share of the global semiconductor market from the current 10% to at least 20% by 2030.
The report pointed out that among the major chipmakers who want to take advantage of European subsidies, only TSMC has decided to open a new factory in Europe. TSMC said it plans to invest 10 billion euros to build a new factory in Dresden, Germany, in 2024, and European chipmakers Bosch, Infineon and NXP will hold a 10% stake in the TSMC project. Intel said it plans to invest 30 billion euros to build a factory in Magdeburg, Germany, if the subsidy application can be approved by the European Union.
"While this is good for the European automotive industry, it is not enough. "It's simply not enough." Especially when you need to make the transition to electric vehicles. ”
Worried that China's over-development of the chip industry is "wrong"
According to Reuters, Chinese chipmakers are using older technologies to produce mature process chips, including many chips for electric vehicles and solar panels, against the backdrop of U.S. restrictions on the export of advanced process chips to China.
Mr. Wennink said Europe's concerns about China's alleged overinvestment in the chip industry were wrong. He pointed out that China is the world's second-largest economy and the largest industrial manufacturer, importing more semiconductors than oil, and the demand for chips with these mature processes is almost bottomless.
"If you look at China's electric vehicle industry, only 10% of all the electric vehicles produced in China come from domestic chip factories in China. ”
While European chipmakers are currently focused on meeting their own capacity, Wennink believes they should look to expand in both China and Europe.
ASML's fourth-quarter and full-year 2023 financial results released on January 24 showed that ASML's full-year performance was better than expected, with net sales increasing by 30% year-on-year. In addition to some of the reasons for the market recovery, ASML also benefited from strong demand in China last year. In 2023, Chinese mainland replaced South Korea as ASML's second-largest market, accounting for 29% of its lithography system sales, up from 14% the previous year, totaling more than €6.4 billion. At the same time, Chinese mainland accounted for 39% of ASML's sales in the fourth quarter of last year, becoming ASML's largest market in the quarter, with a significant gap from the 8% share in the first quarter.
ASML NXE3400 EUV lithography machine
ASML CFO Roger Dassen said that most of the equipment delivered to China in 2023 is based on orders from 2022 and beyond. He expects that with the latest export restrictions issued by the United States and the Netherlands coming into effect, sales in the Chinese market may be affected by 10% to 15% in 2024.
Wennink called 2023 a "top year" for ASML, but he predicted that 2024 would not be able to achieve growth as high as 30%. He said Chinese mainland's share of ASML's sales would "likely" decrease in the coming quarters. However, nearly 90% of ASML's business in Chinese mainland is related to mature process technology, which is not currently affected by regulation.
In January this year, the Netherlands' new export controls to China came into full effect. Bloomberg disclosed earlier that this move was at the request of the Biden administration in the United States. A few weeks before the ban came into effect, ASML held a license to supply three top-of-the-line immersion deep UV lithography machines to Chinese companies. However, people familiar with the situation said that US National Security Advisor Jake Sullivan and other US officials approached ASML last year and demanded that they immediately stop the planned shipment of some equipment to Chinese customers.
Chinese Foreign Ministry spokesperson Wang Wenbin said on January 2 that China has always opposed the United States broadening the concept of national security and coercing other countries to engage in a technological blockade against China under various pretexts. Semiconductors are a highly globalized industry, and in the context of the deep economic integration of various countries, the US side's hegemonic and bullying behavior seriously violates international trade rules, seriously undermines the global semiconductor industry pattern, and seriously impacts the security and stability of the international industrial and supply chains.
He stressed that we urge the Dutch side to uphold an objective and fair position and market principles, respect the spirit of the contract, take concrete actions to safeguard the common interests of China and the Netherlands and their enterprises, and maintain a stable and free, open, fair and non-discriminatory international trade environment for international industrial and supply chains. China will pay close attention to relevant developments and resolutely safeguard its legitimate rights and interests.
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