ASML says it is not affected by the US-China semiconductor war

ASML, one of the world's most important semiconductor equipment companies, has just announced a surge in revenue and profit in the second quarter of 2023, but warned of macroeconomic "instability" in the coming time.

The Netherlands-based company makes the expensive machines that produce the world's most advanced chips. ASML's customers include TSMC, the world's leading contract chipmaker.

The semiconductor maker said it expects net sales in the third quarter of 2023 to be between 6.5 billion euros and 7 billion euros. The company also raised its outlook for the full year of 2023, estimating a 30% increase in sales instead of the previous 25%.

The importance of chip foundry tools puts ASML in the middle of the ongoing US-China tech war.

The company said it raised its full-year outlook thanks to strong sales of deep ultraviolet (DUV) lithography machines, which are used to produce memory chips found in everything from smartphones to laptops, servers and eventually artificial intelligence applications.

However, ASML CEO Peter Wennink also warned of macroeconomic uncertainties. “Our customers across different market segments are cautious about the current developments. They expect a market recovery to follow,” said ASML’s chief executive. “However, the recovery is still unclear.”

Companies that design and found chips used in end-products like smartphones are dealing with rising inventories as demand for consumer electronics continues to remain low. That means chipmakers are cutting back on production, which means they are using less ASML tools than before.

Not significantly affected by export restrictions

According to Refinitiv data, the Dutch company achieved sales of 6.9 billion euros in the second quarter of 2023, exceeding the estimate of 6.72 billion euros, equivalent to a growth of 27% compared to the same period. In terms of net profit, the company recorded 1.9 billion euros, higher than the forecast of 1.82 billion euros, equivalent to a growth of 37.6% compared to last year.

ASML is caught up in Washington's efforts to isolate Beijing from key technologies, including those involved in making advanced semiconductors.

Since October last year, the US has imposed sweeping export restrictions on certain technologies it fears China could use for military or artificial intelligence applications, and the Biden administration has pressured allies to do the same.

In June 2023, the Netherlands, where ASML is headquartered, announced an export ban on advanced semiconductor manufacturing equipment, requiring companies to obtain government licenses for certain types of technology.

However, according to ASML CEO, the new regulations did not come as a surprise to the company, and commented that the export control measures “have a negligible impact on us in 2023, as well as on the long-term outlook”.

(According to CNBC)

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