Lithography systems: China spends the most money
ASML, the world's most important fab equipment supplier, is stabilizing – thanks in particular to strong demand from China.
ASML's Twinscan NXT:1980Di lithography system, which Chinese companies are still allowed to purchase.
(Image: ASML)
ASML exceeded the revenue threshold of six billion euros again in the second quarter of 2024. The Dutch global market leader generated almost 4.8 billion euros from the sale of lithography systems. An additional 1.5 billion euros was generated from the maintenance of machines already sold. Of the total turnover of 6.24 billion euros, 1.58 billion euros remained as net profit.
Chip manufacturers in China continue to show by far the greatest buying interest: The country accounted for half of the sales revenue, i.e. more than 2.3 billion euros. This includes China's largest chip contract manufacturer SMIC, but also many small producers, for example of controllers and sensors.
(Image: ASML)
Political wrangling
Due to export restrictions, they have only been allowed to buy older lithography systems from ASML that are sufficient for the countless small chips since the beginning of 2024. The USA is putting pressure on ASML and the Netherlands to further tighten export restrictions.
The new ASML CEO Christophe Fouquet is also publicly arguing against this – he replaced the previous CEO Peter Wennink, who retired at the end of April 2024. In an interview with Handelsblatt, Fouquet said: "It makes no sense to stop someone from producing something you need."
He was alluding to the massive production capacity with older process generations in China – often with structures of 90 nanometers or even coarser. Currently, Europe and North America would probably not be able to meet their own demand for such chips.
From a political point of view, ASML is one of the most important companies in the world because it produces the most advanced lithography systems. ASML has a worldwide monopoly on current machines with extreme ultraviolet (EUV) exposure technology. However, the manufacturer has always been prohibited from selling these to China.
Things are looking up again
According to ASML, the semiconductor industry is continuing to stabilize after the downturn in 2023. However, the company has not yet returned to the production level of more than 110 new lithography systems per quarter. In the second quarter, there were 89 new systems, plus 11 refurbished systems. Eight of the 89 were EUV machines. In comparison: at peak times, ASML sold 17 EUV systems within three months.
In the current third quarter of 2024, ASML expects sales of between 6.7 billion and 7.3 billion euros. In a best-case scenario, ASML would approach its record of a good 7.8 billion euros in the fourth quarter of 2023. At that time, the manufacturer was still allowed to sell more expensive lithography systems to China – this and asynchronous cycles boosted the business figures, even though the semiconductor industry was in a bad way.
The outlook in particular does not seem to be enough for the stock market. The share price has fallen by almost ten percent since the publication of the quarterly report.
(mma)
