ASML CEO: There is currently no reason not to provide after-sales service for equipment that has already been sold to Chinese buyers
In the past month, the Biden administration has stepped up pressure on the Dutch government to coerce it to cooperate with the United States' "containment" of China's advanced semiconductor industry. Among other things, it was asked to prevent the domestic lithography giant ASML from providing after-sales services such as repairs for "restricted" chip-making equipment purchased by Chinese customers before the current sales ban went into effect.
According to a report by Reuters and Bloomberg on the 17th, local time on Wednesday, ASML's CEO Peter Wennink said that there is no reason why ASML should not provide services for equipment that has been sold to Chinese customers, and there is no service limit for the equipment they install in China.
According to reports, Wennink revealed the relevant situation on an investor conference call after ASML released its financial results for the first quarter of fiscal 2024 on the same day. He confirmed that the U.S. and Dutch governments are in talks to limit the level of after-sales service ASML can provide for equipment sold to customers in China.
"There have been discussions between the two governments," he said...... Of course, we're also making suggestions" "I think that's something that governments need to discuss, [as] ...... part of their so-called national security interests".
"At the moment, there is nothing stopping us from servicing the products that our Chinese customers have already purchased", Wennink stressed on the phone.
ASML CEO Wennink/Data map from Visual China
Bloomberg reported that ASML is Europe's most valuable technology company, and it has now become a target for the U.S. government to hinder the development of China's chip industry. The Biden administration pushed for new Dutch export controls to go into full effect in January, after ASML held a license to offer three top-of-the-line immersion deep UV lithography machines to Chinese buyers.
For ASML, limited equipment maintenance will also cause some trouble. Lithography machines are the key equipment for manufacturing chips, which can hardly be replaced, only for continuous maintenance, and about 25% of ASML's profits come from after-sales services such as maintenance and upgrades of installed equipment.
The report pointed out that judging from ASML's financial report for the first quarter of fiscal year 2024 released on the 17th, sales to China still maintain a strong momentum, and Chinese buyers' demand for old products continues.
According to the financial report, in the first quarter of this year, ASML's revenue from Chinese mainland accounted for 49%, about 2 billion euros (about 15.462 billion yuan). The company's largest markets, Taiwan and South Korea, have remained low, at 6% and 19% respectively.
As of the first quarter of this year, Chinese mainland, traditionally ASML's third-largest market, has been its 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 headquarters in the Netherlands The picture comes from Visual China
According to Reuters, Asml's chief financial officer, Roger Dassen, said that about 20 percent of the company's unfulfilled orders came from Chinese customers. He also said that Chinese chipmakers are expanding the production of some "mature" chips.
"Demand in China is strong because their capacity is increasing. Dawson further predicted that the likely result of this is that China's global market share will be larger in the coming years, "and their self-sufficiency will be greater than they are today." ”
He added, "We believe that China's current increase in capacity is reasonable and in line with the ...... The needs of the world in the second half of this decade. ”
Bloomberg mentioned that ASML had previously predicted that as much as 15% of Chinese sales could be affected by export control measures this year. However, Dason said in an investor conference call after the earnings release that they expect demand in China to remain "strong" for the rest of the year.
Earlier this month (8th), Alan Estevez, the director of export policy in the Biden administration, visited the Netherlands and continued to put pressure on ASML's semiconductor equipment after-sales maintenance and other matters in person, which caused the Dutch government a headache both diplomatically and commercially. According to Reuters analysis, there are signs that the Netherlands may continue to align with Washington on export restrictions, but considering the protracted conflict between Russia and Ukraine and the uncertainty of domestic politics in the United States, the Dutch government will also have concerns about China's relevant influence.
Bloomberg reported on the 13th, citing a number of people familiar with the matter, that the United States has recently pressured allies such as the Netherlands and Japan to further restrict China's access to semiconductor technology, and both the Netherlands and Japan are resisting these additional restrictions, hoping to spend more time assessing the impact of existing export restrictions, while waiting to see who will win the US presidential election in November.
In response to the situation of the United States coercing the Netherlands to carry out a scientific and technological blockade against China, Chinese Foreign Ministry spokesman Wang Wenbin previously responded that China has always opposed the United States to generalize the concept of national security and coerce other countries to engage in a scientific and 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.
Wang Wenbin said: 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 the stability of the international industrial and supply chain and a free, open, fair and non-discriminatory international trade environment. China will pay close attention to relevant developments and resolutely safeguard its legitimate rights and interests.
This article is an exclusive manuscript of Observer.com and may not be reproduced without authorization.