American authorities regularly update export restrictions related to China, and ideally would like to see synchronized actions on the part of their allies, but the latter are finding less and less justification for US steps in this direction from a national security point of view. The head of ASML believes that pressure on US partners in this area will continue.
Image source: IBM
ASML CEO Christophe Fouquet shared his opinion in an interview with Bloomberg at the Tech Summit event in London. “If you look at the geopolitical landscape, the United States will continue to put pressure on its allies to impose additional restrictions. The question is what is good for the Netherlands? What is good for Europe? — the head of the world’s largest supplier of lithographic scanners necessary for the production of chips expressed his concern about the observed trends.
As Fouquet explained, the bulk of ASML’s equipment supplies to China relate to mature technologies that are less likely to pose a threat to national security. “The main focus in China today is on mass semiconductors, they are very different from AI,” added the head of ASML. However, this specificity does not prevent the company from expanding its business in China. For five consecutive quarters, the country has been the largest source of revenue for ASML, and according to the results of the previous one, its share generally approached 50%.
As it became clear after the publication of the recent quarterly report, ASML management has no illusions about the continued high dependence of revenue on the Chinese market. In his opinion, next year the share of ASML’s revenue in the Chinese market will drop closer to the historically characteristic 20%. According to Fouquet, the high volumes of equipment deliveries to Chinese customers are partly due to the delayed fulfillment of orders from the company, although they could have been received at the height of the COVID-19 pandemic. That is, not only the strengthening of sanctions will influence the return of the share of ASML’s revenue in China to historical, lower values. In this case, the pandemic also left its mark.