ASML says geopolitics, new export restrictions remain risks

CANON

14/02/2024 07:53

AMSTERDAM, Feb 14 (Reuters) - ASML  ASML.AS , the
largest supplier of equipment to computer chip makers, said on
Wednesday that geopolitical tensions and any expansion of a
U.S.-led campaign to restrict its exports to China remain
business risks.
    In its annual report published on Wednesday, the Dutch
company flagged the growing list of restrictions imposed by the
United States, mostly with the assent of the Dutch government.
    Those include Dutch licensing requirements for most of
ASML's advanced product lines, as well as a unilateral move by
the U.S. in October 2023 to restrict exports of older equipment
to unspecified Chinese plants.
    "The list of Chinese entities impacted by export control
restrictions has increased since 2022," the company wrote.
    "The list of restricted customers and the scope of the
restrictions are subject to change."
    In January, it said it expects U.S. and Dutch export curbs
to reduce sales of its mid-range "DUV" product lines to China by
about 10% to 15% this year, after they hit record levels in
2023.
    Following a U.S.-led campaign to slow Beijing's
technological and military advances, ASML has been restricted
from selling its most advanced EUV tool line in China since 2019
and has never sold an EUV tool there.
    For its part the Chinese government has been subsidizing
domestic chip-making in a bid for self sufficiency, as it is a
huge importer of chips for its own market and for its
manufacturing industries.
    ASML dominates the market for lithography systems, machines
used to help create circuitry in one key step of the chip-making
process.
    In 2023, while many chipmakers were slowing orders amid an
industry slump, China passed South Korea to become ASML's second
largest market, representing 26.3% of sales, with Taiwan
remaining its largest at 29.3%.
    ASML noted that its list of competitors is growing beyond
traditional rivalries with Canon  7739.T  and Nikon 7731.T  of
Japan in its older core business, and non-lithography U.S. firms
Applied Materials  AMAT.O  and KLA Corp. KLAC.O .
    "We also face competition from new competitors with
substantial financial resources, as well as from competitors
driven by the ambition of self-sufficiency in the geopolitical
context."
    Shanghai Micro Electronics Equipment (SMEE) is China's best
known maker of lithography machines.

 (Reporting by Toby Sterling; editing by Miral Fahmy)
 ((toby.sterling@thomsonreuters.com;))