Ming-Chi Kuo noted that ASML is in rumors to increase the price of its chip-making tools for TSMC. But that won’t be the exact case. Perhaps, the Taiwanese semiconductor firm will likely bargain with ASML and suppress it for price reductions.

TSMC is one of the biggest customers of ASML. The latter used to sell large lithography machines to the former to print circuit patterns onto silicon wafers.

Wall Street stated a few points that hint at why ASML could raise the price of its chip equipment for TSMC. Firstly, ASML has planned to achieve €30 to €40 billion in revenue range by 2025. The firm is taking new steps to enhance its sales by next year.

Secondly, TSMC and other customers of the Dutch chip equipment supplier are looking forward to more advanced chipmaking processes by next year. This may ultimately increase the demand for ASML’s highest-end EUV tools pricing €350 million.

Lastly, ASML is seeing a major decline in semiconductor stocks for the time being. Customers like Intel and Samsung didn’t make much progress. But TSMC has recently reported blockbuster earnings with 54% profit. This could be a reason to hike chip equipment prices for the Taiwanese semiconductor firm.

TSMC is highly dependent on ASML for chipmaking tools. Thus, the Dutch firm could take advantage of this point to some extent by raising its price. However, the U.S. government may subsidize this dealing with better profits on both sides.

Note that neither ASML nor TSMC has confirmed this news so far. Hence, it is better to take this rumor with a grain of salt at present.

ASML rumored to increase chip-making tool price for TSMC (Image Credits: ASML)

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Bloomberg noted that most of the ASML trade licenses will expire later this year. These licenses are an official approval of shipping certain chipmaking tools like DUV lithography machines to China. Many Chinese firms depend on this equipment.

ASML can request license renewal but the Netherlands government might reject it. This could be a follow-up of the U.S. trade export controls that have been limiting foreign suppliers to deliver advanced tools or chipmaking machines in China.

Biden administration has said to increase the security measures for its partner countries as well. This will ultimately prohibit the other regions from doing business with the Chinese companies, creating an absence of advanced tech products.

Inputs reveal that ASML ships the chip-producing tools with maintenance agreements that help to keep the equipment alive. However, a limitation on selling these machines could soon make them inoperable.

Netherlands to limit ASML chipmaking tools for Huawei and other Chinese firms (Image Credits: ASML)

Neither ASML nor the Dutch government has commented on this matter so far. If correct, such a step will increase problems for Huawei and other chipmakers in China. For now, ASML is the main supplier of chip equipment for Chinese firms.

However, blocking ASML from supplying chipmaking tools will affect Huawei and the Chinese chipset industry. It will also impact the chipmaker and its overall growth in the Chinese market. As per reports, China is already 2-3 years behind in the chip race.

The decision to restrict ASML from shipping chipmaking equipment to China is still under consideration and hasn’t been confirmed. How Huawei and Chinese companies will react on this matter would be worth looking forward to.

[Source – Bloomberg]

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Biden administration considers pressuring the Netherlands to stop ASML from sending its chipmaking tools to China. The details mention that the authorities may list some Chinese chipmaking firms and restrict them from obtaining Dutch tools.

The U.S. export policy chief – Alan Estevez will meet the Dutch government and ASML executives in the Netherlands next Monday to bake discussions on this matter.

“The Netherlands always has good discussions with our partners. The meeting of officials on Monday is one example of that” – said the Dutch Foreign Ministry, marking confirmation of the upcoming meeting between the U.S. chief and ASML.

U.S. may block ASML to supply chipmaking tools in China (Image Credits: Reuters)

While the meeting may strengthen relations between the Dutch authorities and the U.S., it mainly aims to push back the potential of China making advanced chipsets.

China opposes:

The Chinese Embassy, on the other hand, says that it doesn’t support the unnecessary expansion of the national security allegations on its companies from the U.S. At the same time, the American government is forcing other countries to join their agenda of deforming Chinese firms in the global market.

Not only China, but the new decision is likely to impact ASML’s sales revenue as China has been the second-largest market for it. Though it is unclear how far things will affect both sides after the U.S.-Dutch meeting on the coming Monday.

Huawei has joined hands with SMIC to build new 5nm chips. The firm is likely to use some stocked equipment to create the new processors. It would be worth seeing whether new efforts of the U.S. will affect Huawei and its partners or not.

U.S. may block ASML to supply chip tools in China (Image Credits: Reuters)

(Source – Reuters)

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It is said that a former ASML employee started working at Huawei in 2022 along with ASML trade data. ASML confirmed this as “unauthorized embezzlement” in its 2022 annual report.

In early 2023, ASML CEO, Peter Wennink said that information theft was a small part of the technology. Interestingly, the ASML CEO (at that time) didn’t point out Huawei in his statement. Also, the identity of the Ex-ASML employee is kept secret in this entire trade secrets theft report on Huawei.

For now, there’s no statement published by Huawei or ASML on this matter.

The new information comes amid the US is looking to tighten export control on more supply chains in China to prevent its technological breakthroughs including semiconductors.

For years, Huawei has been the center of US-China trade disputes. In 2019, the US Commerce Department added Huawei to the Entity List. This prohibits the US suppliers from selling products such as chipsets to Huawei. However, at that time, U.S. commerce allowed some suppliers with special licenses to sell products to Chinese companies.

Later on, the impact of the Entity List began to fade away with alternative global supply chains. Therefore, the US expanded the effect of this restriction program to overseas markets and all of the companies that are using US-originated technologies.

ASML is also restricted by the US to ship lithography machines to China. Recently, the US announced a new ban on advanced AI chip technology export and ASML expressed that this would have a massive impact on its customers.

Why lithography is important?

A lithography system is essentially a projection system. Microchips are made by building up complex patterns of transistors, layer by layer, on a silicon wafer and lithography systems are central to that process.

(source)

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After the Q3 business results announcement, the ASML CEO, Peter Wennink said in a press conference that he is still seeing massive demand from Chinese chipmakers despite the latest export ban from the US and Dutch governments.

However, he also mentioned that a tool, which was overlooked by the Dutch government is now banned by the U.S. administration. ASML chief confirmed this restricted product as 1980Di, which is used to make both advanced computer and mid-range chipsets.

“In principle the 1980s would fall under the export control restrictions, but only when … (they) are used for advanced semiconductor manufacturing,” Wennink said.

However, he also argued that only a few of the chipmakers inside China could be considered advanced equipment users. While the rest of them aren’t.

ASML is the largest supplier of lithography equipment used by top chipmakers including TSMC, Samsung, and Intel. Also, China holds the third rank in its customer geography after the US and Taiwan.

To conclude, He mentioned that about 15% of the ASML sales to China will be affected by the latest US restrictions.

(source)

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