In the chip trough, Chinese mainland supported the revenue of lithography machine giants

Observer.com

2024-04-17 17:38Posted on the official account of Shanghai Observer.com

[Text/Observer.com Lu Dong Editor/Zhang Guangkai]

On April 17, Dutch lithography machine giant ASML disclosed its first quarter report for 2024, achieving net sales of 5.3 billion euros (about 40.8 billion yuan), down 21% year-on-year and 27% month-on-month, net profit of 1.2 billion euros, down 40% year-on-year and up to 40% month-on-month, and gross profit margin of 51.0%, up 0.4 percentage points year-on-year and 0.4 percentage points month-on-month.

In the first quarter of this year, ASML added orders of 3.6 billion euros (656 million euros for EUV lithography machines), less than the expected 4.63 billion euros.

ASML said in response to an inquiry from the observer.com that as the semiconductor market has just recovered from the bottom of the cycle, the growth of the company's global performance in the first quarter of this year has also slowed relatively slowly, and customer demand from outside Chinese mainland is low.

According to the financial report, in the first quarter of this year, ASML's revenue from Chinese mainland accounted for 49%, while the company's largest markets in the past, Taiwan and South Korea, remained low, only 6% and 19% respectively. As of the first quarter of this year, Chinese mainland has been ASML's largest market for three consecutive quarters, accounting for 46%, 39% and 49% of revenue, respectively, compared with 8% in the first quarter of last year and 24% in the second quarter.

ASML told the Observer that Chinese mainland customers continue to invest in mature technologies for the production of mainstream chips, and demand from Chinese mainland customers has been strong, so Chinese mainland accounted for a relatively high proportion of system net sales by region in the first quarter of this year. However, in terms of system net sales, ASML's system net sales in Chinese mainland in the first quarter of this year were 1.9 billion euros, lower than the sales of 2.2 billion euros in the fourth quarter of 2023.

"At the same time, for customers who have already purchased a lot of equipment last year, they need some time to digest the equipment, so the proportion of net system sales revenue in the first quarter in Taiwan is relatively low. The lithography giant said.

ASML lithography machine

A similar situation is also reflected in the financial reports of other semiconductor equipment manufacturers.

For example, the financial report of the American chip equipment giant Applied Materials shows that in the first quarter of 2024, the company's revenue from Chinese mainland accounted for 45%, while Taiwan, China, accounted for 8%, and South Korea accounted for 18%. Another U.S. semiconductor equipment giant, Lam Research, disclosed that in the fourth quarter of last year, Chinese mainland contributed 40% of revenue, while South Korea and Taiwan accounted for 19% and 13%, respectively.

Regarding the trend of Taiwan's shrinking share, Sheng Linghai, vice president of research at Gartner, told the observer that this shows that the semiconductor market is in the process of recovering from the trough stage, and investment is delayed, which now reflects the conservative decision of capacity investment at least 6 months ago.

"The increase in the proportion of Chinese mainland is mainly due to the overall market contraction, and the Chinese mainland market is still due to geopolitical considerations, and has to buy as many lithography machines as possible when allowed. Moreover, the semiconductor industry investment in Chinese mainland, due to the impact of autonomy, is not completely related to the market situation and has a certain degree of independence. He said.

According to data released by the Semiconductor Industry Association (SIA), the total sales of the global semiconductor industry in 2023 will be $526.8 billion, down 8.2% from $574.1 billion in 2022, and is expected to grow by 13.1% in 2024. The International Semiconductor Industry Association (SEMI) predicts that after a 11% decline last year, the entire semiconductor industry will rebound by 15% this year.

ASML also gave a new performance expectation, expecting net sales of 5.7 billion to 6.2 billion euros in the second quarter of this year, an increase from the previous quarter, but still less than the 6.9 billion euros in the same period last year, and a gross profit margin of between 50% and 51%, basically flat from the previous quarter, slightly lower than the 51.3% in the same period last year. The company expects net sales in 2024 to be broadly flat compared to 2023.

In November last year, the Dutch company told the Observer that China plays an important role in the highly globalized semiconductor industry and is one of the important markets for ASML. "On the premise of complying with relevant laws and regulations, we provide lithography machines and related products to Chinese customers to help them manufacture chips with mature processes and achieve cost reduction and efficiency increase. ”

"As the semiconductor industry continues to recover from the downturn, our outlook for the full year 2024 remains unchanged and we expect the second half of the year to be stronger than the first. We see 2024 as a year of adjustment, and we will continue to invest in capacity enhancement and technological advancement to prepare for the inflection point of the industry's cycle. ASML CEO Peter Wen mentioned in the financial report.

Sheng Linghai pointed out to the observer that the overall market has begun to pick up this year, but the investment in production capacity of semiconductor companies cannot be turned into market revenue immediately, and it will take 6-12 months to realize the planned order process.

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