You should know that most of the chip manufacturing machines are produced in the Netherlands. However, AMSL cannot sell them to China due to the sanctions recently imposed by the United States.
The sanction is based on the fact that some of the technologies and components used to manufacture them are patented in the United States. If the manufacturer ASML were to ignore this, it would face serious legal problems and even be unable to use the patented technologies in the United States.
China reportedly invested $26 billion in chip-making machines
Bloomberg has revealed that China continues to import semiconductor manufacturing equipment at a record pace. It should be noted that most of these machines are focused on “old” manufacturing processes.
You have to know that the US is afraid of China’s use of these machines, hence the sanctions. They are worried that US-made technologies will be used to undermine national security. China cannot buy machines that make chips at 10nm nodes or below, so they buy old machines and adapt them to their needs.
The results report of ASML provides more than relevant information. China, For the second consecutive quarter, it is the biggest customer of the Dutch company. During the first and second quarter, 49% of the equipment was sent to China.
According to Bloomberg, China has reportedly purchased $26 billion worth of machinery, a record figure. The previous record was also held by China, when in 2021 it purchased $25 billion worth of machinery in the same period.
The toughest sanctions have been imposed on US citizens or permanent residents working at ASML, Applied Materials or China. All of them face significant investigations on charges of helping to evade restrictions on sales to China.
Applied Materials is reported to have seen a sharp increase in demand from China. It is reported to have posted a year-on-year increase of 102%, which represents 43% of the company’s revenues compared to the usual 25-30%. According to Mizuho analyst Vijay Rakesh, this is due to a very strong increase in demand for DRAM.
Back to ASML, due to Chinese demand, the company is the largest exporter of wafer production equipment in the HS-8486 category. At the same time, ASML is unable to sell extreme ultraviolet (EUV) machines for manufacturing chips under advanced nodes.
EUV machines use ultraviolet light, which has a shorter wavelength. It enables chip manufacturing at nodes below 10 nm, which is essential for producing AI solutions.
To get around this limitation, China is using a complex manufacturing process. Advanced chips can be made with older machines if multiple layers of masking are used during the manufacturing process. This means increased production times and increased complexity.
A complicated situation for China that is not having the expected effect. Despite everything, they are moving forward with their plans and looking for alternative solutions so as not to depend on American solutions.