ASML chief requires ‘smart’ chip export controls from Dutch authorities

The pinnacle of ASML, Europe’s largest chip firm, has referred to as on the Dutch authorities to go for “smart” controls on exports to China that shouldn’t have a “main affect” on key international industries, as prolonged negotiations between Washington and The Hague are poised to shut.

Japan and the Netherlands, two of an important nations within the international chip provide chain, are anticipated to tighten restrictions on exports of chips and chipmaking instruments within the coming weeks after years of lobbying from Washington.

Final yr, the US launched increasingly tough restrictions stopping its corporations from supplying instruments, gear and personnel that might help the event of China’s superior chipmaking. It has been pushing its principal allies to implement comparable measures to make sure its controls are efficient.

“It’s my hope that they’re going to be smart and do one thing that doesn’t have a serious affect . . . and fallout in industries which might be utterly depending on these semiconductors,” mentioned Peter Wennink, chief govt of ASML, in an interview with the Monetary Occasions, pointing to the automotive, power transition and medical know-how industries.

Wennink additionally warned that rising bifurcation within the international chip business — partly due to big waves of presidency funding in addition to escalating commerce tensions — was creating extra “hurdles” and “friction” for the broader chip business.

“You create extra friction, and with friction issues are . . . going to turn out to be tougher,” he mentioned. “Chip availability could possibly be decreased.”

His feedback got here as ASML on Wednesday reported a document order backlog of greater than €40bn and forecast that gross sales would enhance by 25 per cent this yr. It posted internet gross sales of €21.2bn in 2022, barely above consensus estimates.

Wennink mentioned ASML’s main prospects had been making ready for a restoration within the second half of this yr and into 2024.

Demand for chips utilized in smartphones, computer systems and information centres fell final yr pushed by fears of a recession, excessive inflation, hovering rates of interest and the Covid-19 disaster in China, one of many largest markets for semiconductors.

ASML, the most important tech firm in Europe with a market capitalisation of €248bn, has been entangled within the commerce struggle between Washington and Beijing since 2019 when a cargo of one in every of its excessive (EUV) lithography machines to China was blocked.

The Dutch chip software provider performs a vital function within the international semiconductor business. It’s the solely firm on this planet able to producing the advanced EUV machines which might be important for manufacturing superior semiconductors utilized in electronics.

Taiwan Semiconductor Manufacturing Co, Intel and Samsung all depend on ASML’s machines and companies for the EUV instruments to construct cutting-edge chips.

In October, Wennink mentioned the US sanctions might have an effect on as much as 5 per cent of ASML’s order backlog, although he famous that the corporate’s principal enterprise in China relied on much less superior applied sciences that didn’t fall below the remit of the newest restrictions.

Nonetheless, on Wednesday he mentioned the affect gave the impression to be lower than initially forecast as Chinese language prospects have merely opted to make older chips that fall exterior of the export controls, utilizing different ASML merchandise.

The Veldhoven-headquartered firm additionally makes deep (DUV) lithography machines to etch circuits into silicon wafers, in a course of that’s normally used for less complicated chips, which it’s nonetheless in a position to ship to China.

ASML expects to make 60 EUV machines and 375 DUV machines within the present monetary yr.

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