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The Unexpected Blow to ASML: A Massive Impact on U.S. and Japanese Equipment Manufacturers

Update time : 2024-10-31 10:05:21

The latest news from ASML has sent shockwaves through equipment manufacturers in the United States and Japan. It is widely known that under the pressure from the United States, China is going all out to develop its chip industry to expand production capacity, reduce imports, and lessen its dependence on foreign sources. Data shows that currently, the number of completed wafer fabs in China has reached 44, with another 22 under construction. It is expected that 18 new wafer fabs will be put into operation in 2024, and more will be built in the future.

In the field of mature chips, the Semiconductor Industry Association (SIA) of the United States predicts that by 2027, China's market share will reach 39%, making it the world's largest semiconductor market. Against this backdrop, large-scale imports of chip equipment by China are of particular importance. Taking ASML's lithography machines as an example, in the first quarter of 2024, the Chinese market contributed 49% of the company's revenue. The same was true in the second quarter, and it was 47% in the third quarter. This means that nearly half of the lithography machine sales came from the Chinese market.

Not only ASML, but other well-known equipment manufacturers such as Applied Materials, Lam Research, KLA-Tencor, and Tokyo Electron have also been significantly boosted by the Chinese market. It is worth noting that in the first half of 2024 as a whole, about 44% of global semiconductor equipment was purchased by Chinese enterprises. Behind this phenomenon lies China's enthusiastic purchasing and stockpiling in promoting chip manufacturing.

However, a major warning recently issued by ASML has unsettled the entire industry. Data released by ASML shows that the orders it expected to receive in the third quarter of 2024 decreased by 53% year-on-year. The direct cause of this decline is the sharp reduction in orders from China. ASML also predicts that by 2025, the proportion of orders from the Chinese market may be only 20%. This news directly led to a 16% drop in ASML's market capitalization overnight (equivalent to about 400 billion yuan).

It should be noted that in the first three quarters of 2024, the proportion of Chinese orders was 49%, 49%, and 47% respectively. A sudden drop to 20% means that China's orders have decreased by at least more than half. This change directly affects the sales situation of other equipment manufacturers, and their revenues will inevitably be affected in the future.

So, why has China, the world's largest equipment purchaser, suddenly reduced its orders for ASML's lithography machines? There are mainly two reasons. First, over the past year or so, China has stockpiled a large amount of equipment. Taking ASML's lithography machines as an example, in the first three quarters of 2024, China's procurement amount was about 55 billion yuan, while in the past year, this figure was usually between 15 billion and 20 billion yuan. In other words, the procurement volume in the first three quarters of this year is equivalent to the sum of the past three years. Obviously, this procurement boom cannot be sustained and will naturally decrease in the future.

Second, technological breakthroughs in domestic equipment are also changing the market landscape. In recent years, the rise of domestic semiconductor equipment manufacturers, especially the fact that Naura has ranked sixth globally, has led many wafer fabs to gradually replace imported equipment. This trend further reduces the demand for foreign equipment.

Overall, after more than a year of prosperity, ASML's warning has indeed brought a significant impact on global semiconductor equipment manufacturers. Chinese chip manufacturers will no longer purchase these equipment as crazily as before in the future, and the entire industry will face new challenges and changes.

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