Access to China 'Essential' as it Develops Chips: ASML CEO

The head of chipmaking equipment giant ASML says it is “essential” to retain access to China – the world’s largest chip market – despite moves by the West to block sales of advanced chips to the authoritarian state.

ASML chief executive Peter Wennick said on Wednesday it was “logical” that China would seek to create its own microchip equipment when it is blocked from buying tech products made in other countries.

ASML Holding NV is Europe’s largest technology firm by market capitalization and dominates the market for lithography tools – important equipment needed to make computer chips.

Last week, the company reported strong first quarter earnings and said China sales would increase as Chinese chipmakers rush to buy older tools that do not fall under US-led restrictions that the Dutch government said it would adopt in March.

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Washington is seeking to slow Beijing’s technological and military advances by hobbling its semiconductor industry.

Speaking at ASML’s annual meeting on Wednesday, Wennick said he was not worried about rivals in Japan, the US or China being close to building cutting edge commercial lithography products.

“But it can happen of course, so it is absolutely essential that we get to keep having market access to China”, which is the largest market for computer chips globally.

“Market access is as important to us as it is to our Chinese customers,” he said.

He said policies such as subsidies in the US, China and Europe will lead to new manufacturing capacity that isn’t utilized at first, leading to more gluts and shortages, such as the Covid pandemic shortages and the current oversupply.

But Wennink said the global chip market would still double to more than $1 trillion, or $1.2 trillion, by the end of the decade.

He said one unnamed carmaker in mainland China, ASML’s third market after Taiwan and South Korea, plans to make so many electric vehicles in the next three years that it would require “six or seven full-fledged logic semiconductor factories” that haven’t yet been built.