Chip Wars Boost Europe’s Top Tech Company—for Now

livemint.com:

The more the U.S. government worries about China’s ambitions in the chip industry, the more equipment for making chips that China seems to buy. When ASML, the Dutch company that makes the world’s most advanced lithography machines for manufacturing microchips, reports fourth-quarter results next week, one of the most eye-catching numbers will be the share of sales it made in China.

This reached an extraordinary 46% in the third quarter, up from just 8% in the first three months of the year. One reason for the increase was a slowdown in Western demand, which gave ASML the chance to catch up on Chinese orders. But another was export controls.

While the company has never been allowed to ship its most sophisticated “extreme ultraviolet" machines to China, the Netherlands and Japan last year agreed to join the U.S. in banning sales of even some less cutting-edge gear to the country. Chinese chip makers likely rushed to source equipment before the restrictions took effect this month.

Even with the bans in place, ASML’s sales to China might be strong this year. The company has said only 10% to 15% of its shipments to the country would be affected. Most of its business with Chinese chip makers is for mature technologies that are still within bounds.

For more advanced applications, China may be able to use several older-generation machines to achieve similar results to the newer ones it can’t buy, potentially giving orders a further boost. China is investing aggressively in new industries such as electric cars and wind turbines that require lots of semiconductors. The country still sources most of these from Western chip makers: It imports more microchips than oil these days.