Update 11/06/2023 8:15am PT: An ASML representative tells us that the statement that ASML would install 600 DUV machines in China is the result of a mistranslation. Instead, ASML's target capacity is 600 DUV machines worldwide (not just in China) per year by the 2025/2026 timeframe.
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As the U.S. government and its allies are tightening their wafer fab equipment export regulations for Chinese entities, ASML remains optimistic and expects the number of installed DUV tools in the People's Republic to increase in the coming years, reports DigiTimes. Meanwhile, the company admits that most of the deep ultraviolet (DUV) lithography machines it supplies to Chinese customers are designed for 'mature and mid-critical' nodes.
"The total number of ASML deep ultraviolet (DUV) lithography and metrology machines installed in China is around 1,400," said Shen Bo, ASML's China country manager, in an interview with TMTPost. "By the end of 2025, DUV equipment installment in China is projected to reach 600." [EDIT: This is a mistranslation, see above statement for correct translation.] ASML does not break down the number of metrology, litho, and inspection systems used by Chinese entities, but we presume that the number of lithography tools is lower than 600 right now.
ASML intensified its shipments to China in Q3 2023. As a result, Chinese companies accounted for 46% of the company's net system sales of €5.308 billion ($5.688 billion) during the quarter, up from 24% in the second quarter. In total, China-based customers procured $2.6 billion worth of wafer fab equipment to the country, including DUV litho tools and metrology systems. Most of them are now aimed at mature and trailing process technologies, such as 28nm, 45nm, 65nm, 90nm, and thicker.
"We are shipping lithography systems for mature and mid-critical nodes to China while, of course, complying with export regulations," said Peter Wennink, chief executive of ASML, at the company's earnings call in late October. The head of ASML also admitted that the company did not ship enough tools to its Chinese customers in recent quarters as it tried to fulfill demand from other clients.
"For systems shipping this year to Chinese customers, the majority of the orders were booked in 2022," said Wennink. "The demand fill rate for our Chinese customers over the last two years was significantly less than 50 percent. So, the Chinese customers were, in fact, receiving a much lower number of systems than they ordered. This was because demand for our systems worldwide significantly exceeded supply. With current shifts in demand timing from other customers, we now have the opportunity to fulfill these orders to our Chinese customers."
We are pretty much certain that the orders made by Chinese companies in 2022 included lithography equipment for making 14nm/16nm-class chips and perhaps even more advanced ones. Meanwhile, we do not know what portion of all the lithography tools these advanced systems made up and whether the orders were fulfilled before the Netherlands restricted shipments of such tools to China on September 1.
