The head of Europe’s largest chipmaker, ASML, said he expects semiconductor demand to recover in the second half of the year, as the company posted a record order book of more than 40 billion euros and forecast sales growth of 25 percent 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 a lift in the second half of the year and into 2024.”
The Dutch chip tool supplier plays a decisive role in the global semiconductor industry. It is the only company in the world capable of producing the sophisticated Extreme Lithography (EUV) machines that are required to produce advanced semiconductors used in electronics.
Taiwan Semiconductor Manufacturing Co, Intel and Samsung rely on ASML machines and services for EUV tools to create advanced chips.
Demand for chips used in smartphones, computers and data centers fell significantly last year due to recession fears, high inflation, soaring interest rates and the Covid-19 crisis in China, one of the largest semiconductor markets.
The company, with a market capitalization of €248 billion, has been embroiled in a trade war between Washington and Beijing since 2019, when the delivery of one of its EUV vehicles to China was blocked.
USA submitted ever tighter restrictions by preventing their companies from supplying the tools, equipment, and personnel that could advance advanced chip manufacturing in China.
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 are business people. We are not politicians,” Wennink said on Wednesday. “We just have to wait until governments and politicians continue to negotiate and come to a reasonable solution.”
Wennink said in October that US sanctions could affect up to 5 percent of ASML’s backlogs, although he noted that the company’s core business in China depends on less advanced technologies that are not subject to the latest restrictions.
Wennink said on Wednesday that nothing “has really changed” since October, when Washington released new export restrictions. He said ASML is still unable to supply EUV machines to China, but can supply less sophisticated DUV systems as well as other tools.
The company, headquartered in Veldhoven, also manufactures deep lithography (DUV) machines for etching circuitry onto silicon wafers in a process typically used for simpler chips.
ASML expects to produce 60 EUVs and 375 DUVs in the current financial year.