TECH

ASML CEO claims Chinese chipmakers are 10–15 years behind global leaders

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.

The hype surrounding AI companies cannot be underestimated. While different technology companies no longer promote any product without mentioning AI, market projections are also becoming increasingly optimistic. Thus, ASML has attracted attention with a bold prediction: the Dutch company expects the semiconductor market to reach US$ 1 trillion by 2030.

The estimate was released, November 14, on “Investor Day”. At a meeting with its shareholders, ASML spoke of its “updated” outlook for opportunities in the semiconductor market. As the world’s only supplier of EUV machinery for manufacturing advanced chips, the company’s optimism does not come without support. “We expect that our ability to scale EUV technology over the next decade and extend our holistic and versatile lithography portfolio will position ASML well to contribute to and seize the opportunity in Artificial Intelligence (AI), and enable ASML to deliver significant revenue and profitability growth,” said Christophe Fouquet, CEO of the company.

To meet ASML’s expectations of reaching $1 trillion by 2030, the semiconductor market must grow by approximately 9% per year starting in 2025.

ASML expects revenues of up to $367 billion by 2030...Of course, ASML did not speak of its optimistic expectations for the semiconductor market as a whole without mentioning the specific financial advantages this should bring to the company.

The Dutch technology company also spoke about the revenue and profit margin it expects to achieve by 2030: “Based on our assessment of different market and technology scenarios, we expect annual revenues of between approximately €44 billion and €60 billion, with a profit margin of between 56% and 60% by 2030,” said Roger Dassen, CFO of ASML.

by mundophone