The semiconductor industry is one of the industries with the highest scientific and technological content, and the lithography machine has become the "crown jewel of the semiconductor industry", which shows that the technical content of the lithography machine is "unfathomable" and cannot be developed by a company.
This is also true, as is the case with ASML's EUV lithography machine. This lithography machine involves more than 100,000 parts, and there are more than 5,000 supply chain manufacturers behind these more than 100,000 parts, and it takes a year to assemble and debug the parts.
Because the development of EUV lithography machine is very difficult, the price of EUV lithography machine is very high, and it is normal for an EUV lithography machine to sell for more than 100 million US dollars. Even so, ASML's EUV lithography machines are in short supply, and sometimes ASML even restricts the sale of such lithography machines.
Continental is one of the world's fastest-growing and largest semiconductor markets, and there is a very large demand for lithography machines, so mainland chip foundries have purchased many lithography machines from ASML.
What is infuriating is that Lao Mei could not see the vigorous development of the mainland's semiconductor industry, so it joined Japan and the Netherlands to form a "tripartite alliance" and formulated their own export controls on semiconductor equipment, restricting Japan's Nikon, Canon, and the Netherlands' ASML from selling lithography machines to Chinese companies.
Under the influence of Japan's export controls, Nikon and Canon restricted the export of lithography equipment below 40nm to Chinese companies in July 2023. Under the influence of Dutch export control, ASML will also have a number of lithography machines that cannot be exported to Chinese companies in 2023, which greatly restricts ASML's sales channels of lithography machines to Chinese companies.
It's just that after ASML implemented export controls on lithography machines, a strange phenomenon still appeared. It is reported that in late January 2024, ASML officially announced its 2023 operating financial report. According to the financial report data, ASML's revenue in 2023 will reach 27.6 billion euros. A year-on-year increase of 30%. The mainland market accounted for 29% of ASML's annual revenue. That's more than double the 14% in 2022.
In the second quarter of 2023, the mainland market revenue accounted for 24% of ASML's total revenue, 46% in the third quarter, and 39% in the fourth quarter. In November and December of the fourth quarter, the amount of lithography machines purchased by Chinese companies from ASML soared by 1,000% year-on-year, an increase that was unimaginable before.
Why is this strange phenomenon happening? I think there are three things to say.
First, ASML personally admitted that it has basically delivered the lithography machine orders needed by Chinese enterprises, and a large part of these lithography machine orders are orders for 2022 and before. It can be seen that after ASML implements export controls in 2023, ASML's exports to Chinese enterprises have increased significantly, which is largely due to the release of order inventory before 2022.
Second, although ASML implemented export controls on lithography machines in September 2023, ASML still applied for export licenses for lithography systems such as 2050i, 2100i, 2000i, and 1980i. These four lithography machines can basically meet the production needs of mainland chip foundries, so mainland chip foundries purchase a large number of these lithography machines, which is also an important reason for ASML's revenue to skyrocket in mainland China in 2023.
Third, ASML is a company, and the first purpose of business survival is to make profits. The mainland market is an important order market for ASML, and it is the market with the fastest growth in demand for lithography machines, so ASML has always wanted to sell lithography machines to Chinese enterprises.
ASML executives have repeatedly stated that they do not approve of decoupling and are unwilling to restrict the sale of lithography machines to Chinese companies. Once the sale of lithography machines to Chinese companies is restricted, ASML will lose its right to speak in the lithography machine market after 15 years.
It can be seen that ASML wants to sell the lithography machine to Chinese companies, and the Chinese companies want to buy the lithography machine back. Under the premise of this willingness, ASML's lithography machine exports to the mainland have skyrocketed, which is a matter of course.
Summary:
In order to make a profit, even if the company is under external pressure, it will not easily compromise. Clearly, ASML is one such company.
As the world's most powerful, technologically advanced and most productive lithography machine manufacturer, ASML has enough resilience and wisdom to deal with the export control of lithography machines, which is the foundation for ASML to sell lithography machines to Chinese enterprises on a large scale. It is believed that in 2024, ASML can still calmly respond to the export control of lithography machines and continue to supply to Chinese enterprises.