Dutch Prime Minister Dick Schoof
AsianFin -- The Netherlands expects U.S. President Donald Trump to keep pressing to restrict ASML Holding NV’s exports of chip-making machines to China, Dutch Prime Minister Dick Schoof said Wednesday in Davos
“The Biden administration pushed very hard and I expect the Trump administration pushing the same way,” Schoof said . With regard to the China policy, the U.S. and the Netherlands “are aligned,” the prime minister added.
This marks the first public comment from the Netherlands' prime minister, who was sworn in July 2024, on China's semiconductor export controls and competition with the United States since U.S. President Trump’s inauguration on January 20.
Netherlands and the United States are having weekly discussions on ASML, said Schoof. However, he emphasized that ASML is crucial to the Dutch economy, saying it is hoped that this position does not change.
When asked whether he expected retaliatory measures from China against the Netherlands' export controls, Schoof said that retaliation is not on the agenda. China and Netherlands are “good friends,” and the two countries may discuss export control issues, and listen to each other. Netherlands has good trade relations with China, but differences may arise even between good friends, he added.
ASML plays a key role in the global semiconductor supply chain, as nearly 90% of the world's chips are produced using ASML's lithography systems. The company is the only one globally producing cutting-edge extreme ultraviolet (EUV) lithography machines for advanced chip production, which are widely used in industries such as electric vehicles and mobile phones. However, due to U.S. restrictions, ASML has never been able to sell its most advanced EUV machines to China.
ASML announced on January 2, 2024 that the Dutch government had partially rescinded export licenses for the NXT:2050i and NXT:2100i lithography machines that were set to be delivered in 2023, which will affect some of ASML’s clients in China.
ASML said in a statement that this export license revocation, along with the latest U.S. export controls, would not have a significant impact on its financial performance in 2023. The U.S. clarified the scope and impact of these export controls during recent communications with ASML. The new rules, announced on October 17, 2023, limit shipments of specific models of mid-to-high-end deep ultraviolet (DUV) immersion lithography machines to advanced chip fabs in China.
ASML reported better-than-expected net sales of 7.5 billion euros in the third quarter of 2023, primarily driven by DUV lithography system sales and installation services.
The company's gross margin was 50.8%, down from the previous quarter, with net profits of 2.1 billion euros. China remains ASML's largest market, accounting for 47% of the company’s sales in the third quarter of 2023. Meanwhile, the U.S. (21%) and South Korea (15%) were the second and third largest market for the company.
Shen Bo, senior vice-president of ASML and president of ASML China, revealed that ASML had nearly 1,400 lithography and measurement machines installed in China by the end of 2023. Based on capacity projections, ASML aims to reach a global production capacity of 500 to 600 DUV systems annually by the end of 2025 or early 2026.
In December, ASML CEO Christophe Fouquet said that due to the U.S. ban on exporting EUV lithography equipment to China, China's chip technology would lag behind the West by 10 to 15 years compared to industry giants like Intel, TSMC, and Samsung.
This ban will indeed have an impact, Fouquet said, adding that running a successful semiconductor plant requires not just money, but also investment in research, learning, and years of experimentation.
ASML expects the recovery of the semiconductor market to be slower than previously anticipated. In the fourth quarter of 2024, the company projects net sales between 8.8 billion and 9.2 billion euros, with a gross margin between 49% and 50%, including two High NA EUV lithography systems whose revenue will be recognized post customer acceptance. As a result, ASML’s full-year 2024 net sales are expected to be around 28 billion euros.
Looking ahead, ASML expects total net sales to grow to between 30 billion and 35 billion euros (down from a previous forecast of 30-40 billion euros) in 2025, with a gross margin between 51% and 53%. This is significantly lower than earlier forecasts.
ASML anticipates that China’s business (net system sales, plus net service and field option sales) will account for about 20% of its total net sales for the year.
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