Recently, the Dutch government has partially revoked the export license previously issued by the ASML-related DUV infiltrating lithography machine.

According to ASML's official statement, the Dutch government has partially revoked the export license previously issued for the NXT:2050i and NXT:2100i lithography machines to be shipped in 2023.

ASML said this would have an impact on its individual customers in China. At the same time, the company does not expect this export license revocation and the latest US export control restrictions to have a material impact on the financial situation in 2023.

The statement also shows that in recent communications with ASML, the U.S. government has provided further clarification on the scope and impact of its export controls. The United States issued the latest export control rules on October 17, 2023, restricting the shipment of certain models of mid-to-high end DUV infiltrating lithography machines to individual advanced chip manufacturing fabs.

"ASML remains committed to complying with all applicable laws and regulations in the countries in which it operates, including export control regulations." ASML concluded its statement.

According to the Securities Times reporter, in recent years, with the introduction of semiconductor export control policies in relevant countries, the industry is more worried about the impact of geopolitics.

In September 2023, the latest chip export control measures in the Netherlands came into effect. According to ASML's response at the time, the company had applied to the Dutch government for the relevant export license. "The Dutch government has also issued the company's required licenses as of September 1, allowing ASML to continue shipping TWINSCAN NXT: 2000i and subsequent infiltrating lithography systems this year (2023)." At the time, ASML told the outside world that the company's customers are also aware of the restrictions imposed by the export control regulations, which means that from January 1, 2024, ASML will not be granted export licenses to ship these devices to customers in China.

On October 17, 2023, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) also issued a number of rules updating and expanding a series of strict export control measures for advanced semiconductors and their manufacturing equipment issued on October 7, 2022. At the time, ASML said it would provide further clarification to the U.S. government on the scope of these new rules.

How will these policies affect ASML's business in China?

At the end of October last year, Shen Bo, ASML's global senior vice president and president of China, told the Securities Times reporter that if ASML's business scale in the Chinese market is estimated this year, it is expected that the Chinese market business may be affected by 10%-15% in 2024. Overall, however, ASML believes that demand in China will remain strong next year, and even taking into account the geopolitical impact, the impact on the company's overall business volume will be relatively limited in the short term.

From the third quarter of ASML2023 financial report, the proportion of sales in the Chinese market rose to 46% of ASML's overall sales in the quarter, and the corresponding data in the first two quarters of 2023 were 24% and 8% respectively.

Regarding the growth of the Chinese market, Shen Bo explained that in the past two years, affected by factors such as capacity constraints, ASML's delivery rate to global customers has basically maintained about 50%. Deliveries to the Chinese market in 2023 are relatively large, mainly because some global customers with larger production capacity will be more sensitive to industry fluctuations, and when the industry downturn, these customers will choose to slow down capacity construction and equipment procurement progress. Customers in the Chinese market are still in the stage of capacity construction, and some customers have even just started, especially in the mature process, the demand is very strong, so they are relatively less sensitive to industry fluctuations.

"Even in the face of industry volatility, the demand from our customers in the Chinese market is still to deliver the goods ordered in the previous two years as soon as possible, while the demand time node of other customers has changed." So what you end up seeing is a relative increase in China's share of the market." Shen wave theory