ASML says geopolitics, new export restrictions remain risks

By Thomson Reuters Feb 14, 2024 | 2:02 AM

AMSTERDAM (Reuters) – ASML, the largest supplier of equipment to computer chip makers, said on Wednesday that geopolitical tensions and any expansion of a U.S.-led campaign to restrict its exports to China remain business risks.

In its annual report published on Wednesday, the Dutch company flagged the growing list of restrictions imposed by the United States, mostly with the assent of the Dutch government.

Those include Dutch licensing requirements for most of ASML’s advanced product lines, as well as a unilateral move by the U.S. in October 2023 to restrict exports of older equipment to unspecified Chinese plants.

“The list of Chinese entities impacted by export control restrictions has increased since 2022,” the company wrote.

“The list of restricted customers and the scope of the restrictions are subject to change.”

In January, it said it expects U.S. and Dutch export curbs to reduce sales of its mid-range “DUV” product lines to China by about 10% to 15% this year, after they hit record levels in 2023.

Following a U.S.-led campaign to slow Beijing’s technological and military advances, ASML has been restricted from selling its most advanced EUV tool line in China since 2019 and has never sold an EUV tool there.

For its part the Chinese government has been subsidizing domestic chip-making in a bid for self sufficiency, as it is a huge importer of chips for its own market and for its manufacturing industries.

ASML dominates the market for lithography systems, machines used to help create circuitry in one key step of the chip-making process.

In 2023, while many chipmakers were slowing orders amid an industry slump, China passed South Korea to become ASML’s second largest market, representing 26.3% of sales, with Taiwan remaining its largest at 29.3%.

ASML noted that its list of competitors is growing beyond traditional rivalries with Canon and Nikon of Japan in its older core business, and non-lithography U.S. firms Applied Materials and KLA Corp..

“We also face competition from new competitors with substantial financial resources, as well as from competitors driven by the ambition of self-sufficiency in the geopolitical context.”

Shanghai Micro Electronics Equipment (SMEE) is China’s best known maker of lithography machines.

(Reporting by Toby Sterling; editing by Miral Fahmy)