ASML: Partial Revocation of 2050 & 2100 Export Licenses

On January 1, 2024, ASML, a prominent manufacturer of photolithography equipment, issued a statement revealing the partial revocation of licenses by the Dutch government for the shipment of NXT:2050i and NXT:2100i photolithography systems in 2023. This development has impacted select Chinese clients, as certain export permits from ASML to these clients were revoked by the Dutch government prior to their scheduled expiration on December 31, 2023.

According to reliable sources reported by Bloomberg, the Dutch government took this action in response to a request from the U.S. government, revoking export licenses for specific high-end DUV lithography machines designated for China, several weeks before the licenses' expiration. ASML remains optimistic, asserting that the withdrawal of these export licenses and the recent U.S. export control restrictions are not expected to have a significant impact on the company's financial performance in 2023.

In recent communications with the U.S. government, ASML has gained further clarification on the scope and implications of export controls. The U.S. implemented updated export control rules on October 17, 2023, restricting the shipment of certain models of high-end DUV immersion lithography machines to specific advanced semiconductor wafer fabrication facilities.

ASML's third-quarter financial report underscores notable figures, including a year-on-year increase of approximately 15.51% in net sales, reaching 6.673 billion euros. The gross margin rose by 0.1 percentage points year-on-year to 51.9%, with a sequential increase of 0.6 percentage points. Net profit also increased by about 11.76% year-on-year to 1.893 billion euros, despite a sequential decrease of approximately 2.52%. Sales revenue from mainland China in the third quarter surged from 24% in the second quarter (approximately 1.345 billion euros) to 46% (approximately 2.442 billion euros), nearly doubling. Notably, the sales revenue from mainland China in the first quarter was only 8%.

The import data for China is also noteworthy, as in October 2023, the country imported 21 lithography machines from the Netherlands, valued at 672.5 million USD. Subsequently, in November 2023, China imported 42 lithography devices, with a total value of 816.8 million USD. Among these, 16 lithography machines originating from the Netherlands amounted to 762.7 million USD, reflecting a remarkable year-on-year growth of 1050%.

It is crucial to emphasize that ASML's shipments in the fourth quarter of 2023 largely received permits by the end of 2022 or early 2023. The delivery cycle for ASML in 2023 spans approximately 18 months, indicating that the machines shipped in the fourth quarter of 2023 were likely ordered in the second or third quarter of 2022.

With the Dutch government's partial revocation of licenses for the NXT:2050i and NXT:2100i photolithography systems intended for China, it becomes evident that ASML has been unable to fulfill outstanding orders for relevant high-end DUV lithography machines to Chinese clients for several weeks. This regulatory development holds strategic significance for ASML's operations and relationships in the international semiconductor landscape.