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The head of Europe’s largest chip company ASML said he expects demand for semiconductors to recover in the second half of the year as the company reported a record order backlog of over €40bn and forecast sales to increase by 25 per cent this year.
“The expectation of the duration of a potential recession in the minds of our customers is much shorter than the average lead time of our machines,” said Peter Wennink, chief executive of ASML. “They want to prepare — because of the strategic nature of our machines — for an upturn in the second half of the year and 2024.”
The Dutch chip tool supplier plays a critical role in the global semiconductor industry. It is the only company in the world capable of producing the complex extreme lithography (EUV) machines that are essential for manufacturing advanced semiconductors used in electronics.
Taiwan Semiconductor Manufacturing Co, Intel and Samsung all rely on ASML’s machines and services for the EUV tools to build cutting-edge chips.
Demand for chips used in smartphones, computers and data centres fell significantly last year driven by fears of a recession, high inflation, soaring interest rates and the Covid-19 crisis in China, one of the biggest markets for semiconductors.
The company, which has a market capitalisation of €248bn, has been entangled in the trade war between Washington and Beijing since 2019, when a shipment of one of its EUV machines to China was blocked.
The US has introduced increasingly tough restrictions preventing its companies from supplying tools, equipment and personnel that could support the advancement of China’s advanced chipmaking.
Japan and the Netherlands, two of the most important countries in the global chip supply chain, are poised to adopt similar restrictions in the coming weeks after months of lobbying from Washington.
“We’re business people. We’re not politicians,” Wennink said on Wednesday. “We just have to wait for the governments and the politicians to keep talking and come to a reasonable solution.”
In October, Wennink said that the US sanctions could impact up to 5 per cent of ASML’s order backlog, though he noted that the company’s main business in China depended on less advanced technologies that did not fall under the remit of the latest restrictions.
Wennink said on Wednesday that nothing had “really changed” since October, when Washington unveiled new export restrictions. He said ASML was still unable to ship EUV machines to China but it could ship less sophisticated DUV systems as well as other tools.
The Veldhoven-headquartered company also makes deep lithography (DUV) machines to etch circuits into silicon wafers, in a process that is usually used for simpler chips.
ASML expects to make 60 EUV machines and 375 DUV machines in the current financial year.
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