Connect with us

International Circuit

ASML CEO’s China visit unlikely to bear immediate fruit

This week’s visit by the CEO of Dutch semiconductor equipment maker ASML to China is unlikely to provide any pain relief for the country’s chip industry, which is being battered by increasingly tough US restrictions on the export of advanced manufacturing tools, according to analysts.

ASML CEO Peter Wennink met with China’s commerce minister Wang Wentao on Tuesday. He was told China wants to create an accommodating business environment for foreign companies, where ASML can maintain confidence and help to jointly safeguard the stability of global semiconductor industrial chains, according to a statement by China’s commerce ministry.

Wennink’s China trip has been low profile and the meeting with Wang was the only publicly reported part of his visit. Wennink did not make any speech or accept any Chinese state media interviews, highlighting the sensitivity of ASML’s position in Beijing’s chip development plans.

ASML has a near-monopoly in the manufacture of advanced lithography machines, needed for the production of cutting-edge chips. The Dutch government has blocked ASML from selling its most advanced machines to customers in China, amid pressure from Washington, which wants to restrain China’s semiconductor progress on national security grounds.

The tone of Wang’s remarks was softer than comments by China’s foreign ministry in early March, when spokeswoman Mao Ning accused the Dutch government of interference with normal trade exchanges between Chinese and Dutch firms, after The Hague moved to further restrict exports of semiconductor technology to China on security concerns.

ASML declined to comment on this week’s China visit by Wennink.

Analysts said Wennink’s trip was unlikely to change the current state of affairs.

“ASML considers China a very important market in Asia, and along with many European firms, it wants to focus on the business side,” said He Hui, semiconductor research director at independent tech consultancy Omdia. “But in the current environment, they have to find a more balanced way for their development in China while reducing the political impact.”

China has recently been wooing foreign CEOs and investors in an attempt to restore confidence after the end of strict pandemic control measures and lockdowns. Apple CEO Tim Cook and Samsung Electronics chairman Lee Jae-yong both met with Chinese officials this week at the China Development Forum. Both were given assurances that China remains open to international cooperation despite worsening relations with Washington.

The Netherlands is currently mulling further restrictions on exports of chip technology to China, which would require ASML to apply for a licence before shipping its deep ultraviolet (DUV) lithography systems to China, further impacting ASML’s business in its third-largest market.

Alongside Japanese lithography producer Nikon and chip tool maker Tokyo Electron Limited, ASML is arguably the most crucial company to the US-led effort to curtail China’s advanced chip-making ambitions.

Both Japan and the Netherlands have agreed to a US request to implement restrictions on China-bound exports of advanced chipmaking tools. Although this angered Beijing, it has few options for retaliation.

The Dutch government is expected to introduce more restrictions in the summer while Japan is expected to make a move in April.
Another analyst, who asked not to be named due to sensitivity of the issue, said ASML’s sway over the Dutch government’s decision is scant, adding that the Netherlands lacks the “strategy flexibility” that South Korea has to protect its firms’ interests while navigating the choppy diplomatic waters between China and the US.

ASML expanded rapidly in China in the past few years in spite of growing friction between Beijing and Washington, with its China unit hiring more than 1,500 people on the mainland last June to support faster growth.

The company added 200 new staff to its existing work force of 1,400 in China last year, where it has 14 offices, 11 warehousing and logistics centres, two research and development bases, a training centre and a maintenance hub.

ASML has been barred from selling its most advanced extreme ultraviolet (EUV) lithography machines to China since 2019. Currently it can still ship to Chinese clients relatively less advanced DUV machines but this may change.

Sales of ArF immersion DUV machines accounted for 34 per cent of ASML’s total system revenue of 15.4 billion euros (US$16.23 billion) in 2022, compared with a 36 per cent share in 2021. The company’s EUV sales, meanwhile, accounted for 46 per cent of total system sales in both 2021 and 2022, according to ASML’s results for the December quarter. South China Morning Post

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!