On Wednesday, the Dutch company ASML, Europe's largest technology company by market capitalisation and market leader in photolithography, held its annual shareholders meeting. Peter Wennink, the company's CEO, warned about the impact of chip subsidies implemented in some countries and gave an outlook on the demand for equipment purchased by China.
Wennink said that the chip bill in the US or EU will lead to the semiconductor industry cannot immediately absorb the new capacity, which will lead to the chip industry’s constant oversupply or shortage.
In recent years, the chip industry has seen a years-long shortage due to the COVID-19. And now, as global shipments of consumer electronics continue to decline, the technology industry is once again entering the dilemma of oversupply of semiconductors.
Wennink believes that the large number of chip subsidies in Europe and the US will increase the volatility of the industry.
In addition, he noted that with countries such as Europe and the US making restrictions on China's chip purchases, it was only natural for China to turn to develop its own semiconductor devices. But China is the world's largest market for computer chips, which requires ASML to continue to gain market access to China, which is absolutely necessary.
Wennink said mainland China is ASML’s third-largest market. He cited a Chinese automaker, which plans to build a large number of electric cars in the next three years and requires half a dozen established semiconductor factories to supply them, but China's own chip factories are still under construction.
He thus stressed the importance of ASML’s dealings with the Chinese market, both for ASML and for its Chinese customers.
Last week, ASML reported strong first quarter results and said that its sales to China will continue to increase.
ASML noted that demand for electric vehicles and mature chips is up in China this year, and it expects stronger demand for equipment purchases. Its latest earnings report showed that Chinese companies accounted for 22% of ASML’s first-quarter revenue, and Chinese buyers accounted for about 30% of ASML’s orders for mature chip manufacturing equipment, up about 10% from the end of last year.
Looking ahead, Wennink also predicted at the conference that the global chip market will double in size to $1-1.2 trillion by the end of this decade.