ASML, the leading maker of lithography systems used to print chip circuitry, told investors at its annual general meeting in Veldhoven that it does not intend to become a constraint on the semiconductor supply chain as it had been earlier this decade. The company pointed to recent capital investments and productivity improvements as the principal reasons it can meet rising demand.
"Being a bottleneck is something we will avoid by all possible means; it is essential to maintaining our current position," CEO Christophe Fouquet said on Wednesday during the meeting.
The comments followed ASML’s first-quarter results published last week, which the company said reflect continued strength from surging demand for artificial intelligence chips and the knock-on effects of memory chip shortages. Those market dynamics have encouraged major customers, including TSMC - a manufacturer of Nvidia’s chips - to expand their production footprints.
When asked what might jeopardize ASML’s dominant status as the supplier of lithography equipment, Fouquet identified the principal risk as an inability to deliver machines on schedule. "Customers will be strongly tempted to look at other suppliers and potentially at alternatives to our technology; we have seen that in the past," he said.
Fouquet was asked about competitive threats from several startups. He described firms such as Substrate, xLight, and Lace as "ideas, not competition today, I want to make that clear."
On the topic of possible new U.S. legislation that could further restrict ASML’s exports to China - a market forecast to represent roughly 20% of ASML’s sales this year - Chief Financial Officer Roger Dassen said it is too soon to know the outcome. He emphasized that, should export limitations be introduced for a particular region, global demand would still require additional capacity.
"If for whatever reason there were to be further limitations for one part of the world, the need for capacity remains, particularly in a world that is currently being characterized by undersupply," Dassen said. He added that capacity displaced in one region would need to be compensated by increases elsewhere: "someone else has to raise their hand and say, you know, I’m going to build more capacity than I originally planned to."
On policymakers, Dassen observed: "I’m pretty sure that policymakers are also considering that element."
Summary
ASML’s management signaled confidence that recent investments and productivity improvements will prevent the company from becoming a bottleneck for chipmakers. The greatest operational risk, they said, is failing to ship equipment on time. Management acknowledged the potential implications of proposed export restrictions to China but said global undersupply means capacity will need to be created elsewhere.
Key points
- ASML has invested in capacity and productivity to avoid repeating past supply bottlenecks, according to CEO Christophe Fouquet.
- Surging AI chip demand and memory shortages are contributing to customers such as TSMC expanding capacity, supporting demand for ASML’s systems.
- CFO Roger Dassen warned that any regional export limitations would not remove the underlying need for additional capacity and could shift where that capacity is built.
Risks and uncertainties
- Operational delivery risk - failing to deliver equipment on time could encourage customers to consider other suppliers or alternative technologies, affecting the lithography market.
- Policy and export controls - proposed restrictions on exports to China could alter sales patterns and force capacity building in other regions, with consequences for global supply chains.
- Competitive developments - while management described certain startups as ideas rather than immediate competition, future advances could change competitive dynamics.