Key Points:
- ASML executives affirm strong demand from Chinese customers, constituting approximately 20% of the company’s order backlog.
- Discussions between the U.S. and Dutch governments focus on restricting ASML’s ability to service equipment sold to Chinese chipmakers.
- China accounted for 49% of ASML’s sales in Q1. Despite regulatory discussions, ASML emphasizes its capability to service installed equipment in China.
- ASML executives express confidence in China’s rational growth trajectory in chip manufacturing, which is aligned with global market needs.
Executives at ASML, the Dutch computer chip equipment maker, expressed confidence in the robust demand from Chinese customers despite ongoing talks between the U.S. and Dutch governments regarding restrictions on servicing equipment sold to Chinese chipmakers.
During a call following the company’s first-quarter earnings report, ASML’s Chief Executive Peter Wennink emphasized that demand from Chinese customers remains strong, constituting approximately 20% of the company’s order backlog. Wennink reassured stakeholders that ASML is fully capable of providing servicing for equipment sold to Chinese customers, stating that there are currently no impediments to servicing the installed base in China.
The discussions between the U.S. and Dutch governments center on restricting ASML’s ability to provide maintenance and servicing for advanced equipment sold to Chinese chipmakers, particularly those requiring an export license under new Dutch regulations introduced in the past year. The U.S. is advocating for measures to make it more challenging for China to develop its advanced chips, citing national security concerns.
Wennink acknowledged the ongoing dialogue between the governments, affirming ASML’s cooperation by providing input. He emphasized the importance of considering national security interests in these discussions.
Despite the regulatory discussions, sales to China accounted for 49% of ASML’s total sales in the first quarter. While China has traditionally been ASML’s third-largest market after Taiwan and South Korea, recent trends indicate a significant increase in demand from Chinese chipmakers.
Roger Dassen, ASML’s Chief Financial Officer, highlighted that Chinese customers represent approximately 20% of the company’s order backlog. He attributed the strong demand from China to the expansion of production capacity for “mature” chips, which are essential components in various consumer products such as refrigerators, phones, toys, and cars. Dassen emphasized that China’s increased self-sufficiency in chip production aligns with global market needs, predicting a rational growth trajectory for the country’s chip manufacturing capabilities in the coming years.
ASML executives expressed confidence in China’s capacity expansion efforts, believing that the country’s contributions to mature chip production will meet global demand in the second half of the decade.
