ASML executives expect Chinese demand to remain strong

By Thomson Reuters Apr 17, 2024 | 10:20 AM

AMSTERDAM (Reuters) – Executives at Dutch computer chip equipment maker ASML said on Wednesday they expect demand from Chinese customers to remain strong, representing “in the ballpark” of 20% of the company’s order backlog.

Chief executive Peter Wennink said on a call after the company’s first quarter earnings that there was currently no reason the company could not provide servicing for equipment it has sold to Chinese customers.

The U.S. and Dutch government are in talks on restricting ASML’s ability to provide maintenance and servicing for advanced equipment sold to Chinese chipmakers that require an export licence under new Dutch rules introduced in the past year.

The U.S. is trying to convince allies, including the Netherlands, to make it more difficult for China to make its own advanced chips.

“There has been a discussion between the two governments … and of course we’re providing input,” Wennink said.

“I think that is something governments need to discuss (as part of)…what they call the national security interest.”

“There’s nothing that stops us servicing the installed base in China today.”

Sales to China made up a record 49% of ASML’s total sales in the first quarter but in recent years China has been the company’s third market following Taiwan and South Korea.

CFO Roger Dassen said Chinese customers represented “in the ballpark” of 20% of the company’s order backlog. He said chipmakers there are expanding production of “mature” chips — meaning those that do not fall under any export restrictions but are still needed in products ranging from refrigerators to phones to toys to cars.

Demand from “China is strong because they’re adding capacity,” he said.

“As a result of this, China’s … global market share over the years will become larger than it is today. Their self-sufficiency will increase in comparison to today.”

“We believe that what China is adding today in terms of mature capacity is rational and is in line with … what the world needs in the second half of the decade,” he said.

(Reporting by Toby Sterling; Editing by Kirsten Donovan and Jane Merriman)