Recently, it was reported that TSMC has temporarily postponed the delivery of some advanced chip manufacturing equipment, and Dutch ASML may be one of the equipment suppliers affected by the delay. At the same time, Huawei Mate60 series mobile phones are on sale before they are released. Ben Lin, a former deputy general manager of R&D at TSMC, insisted that the Mate60Pro mobile phone uses a Chinese-made chip with lower performance than TSMC's 5nm chip, but the yield rate is estimated to have increased from 15% to 50%.
As a leading manufacturer of advanced chip equipment, ASML's status has always been unshakable. However, recent delays in the delivery of goods by customers and the rise of local manufacturing in China may indicate that ASML will face challenges in the future. Lithography machine market competition ASML dominates In recent years, the lithography machine market has continued to expand, and the main competing companies in this market are ASML, Nikon and Canon. According to statistics, from 2018 to 2022, the total revenue of lithography machines from the three major suppliers of ASML, Nikon and Canon increased from US$12.3 billion to US$19.8 billion, corresponding to a compound annual growth rate (CAGR) of 13%. It is expected that the global lithography machine market will reach US$25.2 billion in 2023. In terms of quantity, global sales of lithography machines have reached 510 units in 2022, and this data is expected to continue to grow to 564 units in 2023. In the lithography machine market, ASML occupies an absolute dominance. In 2022, the market shares of the three manufacturers ASML, Nikon and Canon will be 82.14%, 10.2% and 7.65% respectively, forming a monopoly pattern led by ASML.
Among them, ASML is the leader in the EUV field of ultra-high-end lithography machines. The ArFi and ArFdry fields of high-end lithography machines are also mainly occupied by ASML. Canon mainly focuses on the i-line lithography machine field, and Nikon is involved in all except EUV. ASML is the only company in the world that can design and manufacture EUV lithography equipment. The market price of a single EUV lithography machine exceeds US$100 million. Nikon can cover all wavelengths except EUV lithography machines, while Canon mainly focuses on i-line and KrF lithography machines.
In terms of revenue, ASML’s revenue in 2022 will reach 21.2 billion euros ($22.77 billion). Nikon and Canon's revenue was US$3.87 and US$28.91 billion respectively.
Among ASML's revenue in 2022, 2.16 billion euros will come from DUV revenue in the Chinese market, accounting for 14% of total revenue.
ASML expects revenue from China to grow significantly in 2023, but some sales will be affected by official Dutch export control measures. However, ASML stated that these measures will have no material impact on this year's performance prospects or in the long term. The company had previously expected that sales in China would remain at around 2.2 billion euros (approximately RMB 16.2 billion) in 2023.
TSMC asks suppliers to delay equipment shipments due to unclear customer demand
However, the recent downturn in the overall market and unclear customer demand have become a major challenge for ASML.
Recently, it was reported that TSMC, the world's largest chip foundry, has become increasingly uneasy about customer demand. In response to uncertain market conditions, it has notified major suppliers to postpone the shipment of high-end chip manufacturing equipment.
The world's largest OEM operator is delaying equipment receipts "in the short term" as a cost-cutting measure while it better handles customer demand, unnamed sources said.
Dutch ASML may be one of the equipment suppliers affected by the delays. ASML CEO Peter Wennink said shortly before the news that some orders for its high-end equipment had been delayed, but he did not disclose the names of specific customers.
ASML is an important supplier to TSMC. The equipment is used to produce sub-7nm process nodes for companies such as Nvidia, Apple, AMD and Qualcomm, all of which have manufacturing contracts with TSMC.
The delays in equipment delivery come as TSMC grapples with weak economic conditions and falling demand for semiconductors. In July this year, TSMC announced that its second-quarter revenue fell 13.7% year-on-year to US$15.68 billion. At the time, executives said they expected growing demand for chips used in high-performance computing (HPC) applications to drive adoption of its most efficient, highest-performing process nodes over the long term.
However, the press release issued by TSMC also stated that President Wei Zhejia pointed out at the second quarter 2023 conference on July 20 that although an increase in artificial intelligence-related demand was observed, it was not enough to offset the overall cyclical adjustment of the business. The business is expected to be supported by the company's strong advancement of 3nm process technology in the third quarter of 2023, partially offsetting continued inventory adjustments by customers.
Wei Zhejia explained that due to the continued weakening of the overall economic situation and weak overall demand in the end market, customers are more cautious and plan to further control inventory, including entering the fourth quarter of 2023.
In addition to facing the sluggish equipment demand caused by terminal demand, ASML also has to face the rise of equipment manufacturers in China's local manufacturing.
USAlimitstimulate chinaManufacturing localization may compete with ASML
The United States introduced new chip control regulations in October last year, prohibiting the sale of 14nm and higher-level chips or related equipment to China, and also restricting Americans from providing any assistance to the development of China's semiconductor industry.
ASML CEO Peter Wennink shared his thoughts on China issues in September and the export controls and protectionism the company faces.
Peter Wennink emphasized that completely isolating China through export controls is not a feasible approach. The breakthrough of the chip in Huawei Mate60Pro indirectly illustrates this point. These restrictions are actually pushing China to redouble its efforts in innovation.
Lin Benjian, a former deputy general manager of R&D at TSMC, also mentioned that due to U.S. restrictions, Huawei’s newly launched Mate60Pro smartphone uses Chinese homemade chips, and its performance is slightly inferior to TSMC’s 5nm chips. However, because the order is large enough, Chinese wafer foundries have a "golden opportunity" to improve the yield rate, which is estimated to have increased from 15% to 50%.
Lin insists that by trying to stop them, we are helping them drive self-sufficiency and compete with foreign suppliers. It doesn't matter if the foreign suppliers are much stronger, they have to rely on a single domestic supplier. In short, containment is not the best way.
In fact, although there is still a large gap in the country, the lithography machine industry in mainland China has the foundation for rapid development, and the lithography technology industry chain has initially taken shape.
Among them, Shanghai Microelectronics takes the lead in lithography machine technology in the country. It is currently in mass production of 90nm resolution ArF lithography machines, and 28nm resolution lithography machines are also expected to achieve breakthroughs.
In lithography machines, laser light sources are the key to achieving more precise lithography. Methods to improve resolution include reducing wavelength and increasing numerical aperture. The delay in the launch of EUV lithography machines is mainly due to the difficulty in meeting the requirements of light source power and optical precision.
The first high-energy excimer laser independently developed, designed and produced by China Keyi Hongyuan Company has filled the gap in China's excimer laser technology field with its advantages of high quality and low cost. It has completed the manufacturing of 6kHZ, 60w mainstream ArF lithography machine light sources. The KBF crystal on the laser is provided by Fujing Technology, a subsidiary of the Chinese Academy of Sciences. At the same time, Keyi Hongyuan is also the light source manufacturer of the 28nm lithography machine to be delivered by Shanghai Microelectronics.
In terms of glue coating and development equipment, Xinyuan Microelectronics Equipment has launched the first immersion high-capacity glue coating and development machine, which can cover the TRACK requirements of all domestic production lines of 28nm and above process nodes, and can cooperate with various mainstream lithography machines for mass production. VeriSilicon's microelectronics products include photolithography process glue coating and development equipment and single-chip wet-process equipment, which can be used for 8/12-inch single wafer processing and 6-inch and below single wafer processing.
At present, domestic lithography machines are still in the DUV stage.DUV lithography machines are also divided into three categories, namely KrF, ArF, and ArFi. The most critical thing about the ArFi immersion lithography machine is the immersion technology. The ArF wavelength is 193nm, and after adding the immersion technology, it can reach 134nm. Once a breakthrough can be achieved, it will be equivalent to entering the high-end ranks of DUV lithography machines. In recent years, domestic enterprise Kaier Electromechanical has made major breakthroughs in liquid immersion control systems.
By observing the progress of Chinese companies in semiconductor equipment in recent years, it can be said that while the United States has restricted the development of China's semiconductor industry, it has also forced the advancement and rise of Chinese companies. Although there is a large gap between Chinese companies and giants such as ASML in the application of advanced technologies, given time, I believe that the speed of progress and breakthrough potential of Chinese companies may also scare competitors.
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