China has witnessed a significant increase in imports of Dutch lithography machines, particularly from ASML Holding, which has led to a surge in sales to China. According to a report based on Chinese customs data, imports of Dutch-made lithography machines, mainly from ASML, grew by 64.8% YoY to reach $2.58 billion from January to July. This figure already exceeds ASML's previous forecast for its 2023 sales to China. The data also reveals that in July alone, China imported lithography machines worth $626 million, almost eight times more than the same month in the previous year.
ASML dominates the global market for advanced lithography machines, which are crucial for manufacturing cutting-edge chips. Due to pressure from the US government, ASML has ceased exports of its extreme ultraviolet (EUV) lithography systems to China. While the company has continued shipping less advanced deep ultraviolet (DUV) lithography systems, new regulations from the Netherlands that will be effective from September 1 will require ASML to obtain a license for exporting its most advanced DUV systems. This development further hampers China's semiconductor industry.
In response to these export curbs, Chinese firms have been stockpiling lithography machines to meet their production demands for as long as possible. According to the consultancy firm JW Insights, this rush to stockpile machines is driven by the need to secure supply before the new regulations take effect. Previously, from 2015 to 2022, the eastern province of Jiangsu, Shanghai, and Beijing were the largest importers of Dutch lithography machines in China.
Despite a global semiconductor industry downturn, ASML's earnings have been boosted by high demand from China. While there has been a delay in demand for ASML's DUV equipment from some customers, the company has observed strong demand for tools used in more mature and mid-critical nodes, especially in China. ASML CEO Peter Wennink mentioned in an earnings call that Chinese customers have shown interest in acquiring machines that are less in demand from other regions. ASML's success in meeting this demand has contributed to their positive financial results.
The Chinese government has criticized the US for pressuring other countries into imposing technological blockades on China, posing threats to the stability of the global supply chain. In response, Chinese media has emphasized the possibility of China achieving self-sufficiency in lithography machines, with reports suggesting the delivery of a domestically-developed machine capable of producing 28-nanometer chips by the end of this year. For more information, please refer to the original article published in the South China Morning Post (SCMP).
