ASML stays optimistic on China as sales surge amid U.S. chip curbs

Nikkei Asia ^

[FarCenter]

ASML's sales to China surged in July-September as chipmakers in the country raced to buy equipment before any further export controls from the Netherlands or the U.S. went into effect.

The Dutch semiconductor industry supplier expects around 10% to 15% of current shipments to China will fall under the updated U.S. curbs going forward but said it remains optimistic about demand coming from the country.

The world's most valuable chip tool maker logged 2.44 billion euros ($2.58 billion) in sales to China in the three months -- nearly double the previous quarter -- to account for 46% of total revenue for the period. China sales accounted for just 24% of ASML's total in the April-June quarter, when the country trailed Taiwan and South Korea as ASML's major markets.

"It's ... fair to recognize that most of the shipments that happened in this quarter are based on [orders] that we already had in 2022 and even the year before," ASML Chief Financial Officer Roger Dassen said in a video interview ahead of the company's earnings call on Wednesday. "We see some shifts in the timing of demand and that really allows for a higher order fill rate of our Chinese customers. That's exactly what's happening right now. So, higher volume in China, lower volume of other customers."

Dassen added that ASML's shipments fully comply with current rules.

The demand fill rate for Chinese customers over the last few years was significantly less than 50% as demand for ASML's systems worldwide significantly exceeded supply, CEO Peter Wennink said at an earnings call Wednesday.

As the global semiconductor industry goes through a downcycle amid a challenging macroeconomic environment, many chipmakers have slowed spending on equipment, giving ASML some breathing room to catch up on filling orders from China, said Wennink.