From November 5th to 10th, the 6th CIIE was held in Shanghai. As an exhibitor, the global lithography giant ASML (hereinafter referred to as "ASML") has received increasing attention in the past two years. Undoubtedly, this is due to the increasingly fierce global chip competition, and ASML and its produced lithography machines are an extremely important link in the chip industry chain.
Shen Bo should be able to constantly feel the existence of this importance. This Chinese person who joined ASML in 2018 is now serving as the Senior Vice President of ASML Global and President of China. He graduated from Wuhan University in China in 1994, majoring in thermal power. ASML's business in China started very early, around the time when Shen Bo was still in high school, this Dutch company sold the first stepper lithography machine to China.
During the CIIE, Shen Bo received an exclusive interview with a reporter from China Business Daily. This coincides with a sensitive moment for the United States to revise a series of chip export control measures introduced in October 2022. Faced with the potential impact of more detailed and comprehensive regulatory measures on ASML performance, as well as the changes brewing in the global lithography market, Shen Bo is very frank. He told reporters that 2024 will be the year of adjustment for the global lithography market. As for the Chinese market, he stated that ASML will continue to support the development of customers in China while complying with relevant laws and regulations, helping them achieve cost reduction and efficiency increase in the mature process of chip manufacturing.
We will continue to expand our talent team and better support the development of Chinese clients, "said Shen Bo.
China Business Daily: Let's start with the CIIE. Can you briefly introduce the process of ASML participating in the CIIE? What beneficial effects did the CIIE bring to ASML's business development in China?
Shen Bo: This is our fifth year participating in the CIIE. The annual CIIE showcases China's continued commitment to creating a market environment for openness and cooperation, and ASML's corporate culture is highly aligned with this spirit of openness. The concept of "sharing the future" conveyed by the CIIE coincides with our vision of open cooperation, and ASML has repeatedly exhibited its cutting-edge lithography technology with an open cooperation attitude.
For many consecutive years of participation, we deeply recognize that the CIIE provides exhibitors with a platform and opportunity to showcase their company image and enhance communication opportunities. In the current digital transformation of society, integrated circuits play a crucial role. As a member of this industry chain, ASML has participated in the CIIE for the fifth time this year and looks forward to using the platform of this CIIE to further deepen the understanding and understanding of ASML panoramic lithography solutions from the perspective of the semiconductor industry chain. Through case studies, it vividly demonstrates the advantages of lithography machines, computational lithography The complete solution for optical and electron beam measurement plays an important role in the industrial chain.
China Business Daily: After years of participating in the CIIE, what has left a deep impression on you?
Shen Bo: It should be said that the establishment of integrated circuit zones at the 2021 CIIE left a deep impression on us. At that time, we felt that the public's understanding of ASML was more objective and comprehensive.
For enterprises, the integrated circuit industry has the characteristics of a long industrial chain and complex technological composition, with a variety of enterprise types involved from upstream to the end of the industrial chain. The integrated circuit zone of the CIIE gathers enterprises from various positions in the industry chain. Whether providing production equipment, or engaging in various types of enterprises such as chip design, chip manufacturing, and terminal chip applications, they can use the zone platform to showcase their products and solutions to the public.
From the perspective of exhibitors, with the development of the times and technological progress in recent years, the public has paid higher attention to the field of integrated circuits. However, understanding such an industry with a long industrial chain and relatively complex industrial structure poses certain difficulties for the audience. The integrated circuit zone can bring together various types of enterprises from above and below the industrial chain. As an important part of the industrial ecosystem, ASML exhibits in the integrated circuit zone, which not only comprehensively showcases the company's own panoramic lithography solutions, but also deepens the public's understanding of the integrated circuit industry chain and helps the audience understand the complexity of the industry chain.
With this professional platform, we can have more focused and efficient communication with our target audience. This year, we also look forward to communicating with more partners within and outside the industry, further strengthening our connections with the Chinese market, and working together to promote the common development of the semiconductor industry.
China Business Daily: You said "we need to further strengthen our connection with the Chinese market". As a multinational company, how does ASML assess the current development status of the Chinese economy? How do you view the prospects of China's economy?
Shen Bo: According to the recently released China's economic data for the third quarter, China's gross domestic product increased by 5.2% year-on-year in the first three quarters, ranking among the top among major economies in the world. The data shows that the overall recovery trend of China's economy is more obvious. For the Chinese market, the long-term positive fundamentals will not change, and development opportunities and challenges coexist.
Faced with the complex international situation, the Chinese economy has demonstrated advantages such as strong resilience, great potential, and abundant vitality. At the same time, China's more proactive opening-up strategy has created a favorable business environment for foreign enterprises, including ASML, to invest and develop in China for a long time, attracting numerous foreign enterprises to participate in the construction of China's economic development.
Over the past 30 years, ASML's deep cultivation and business operation development in the Chinese market have strongly demonstrated our confidence and commitment to the Chinese market.
China Business Daily: When did ASML's business in China first start?
Shen Bo: 1988. That year, ASML delivered the first stepper lithography machine. Since then, we have entered the Chinese market for more than 30 years and have been developing together with the Chinese semiconductor industry during this period.
China Business Daily: Can you talk about China's position in the overall strategy of ASML? What strategies does ASML plan to use to conduct business in China in the next 3-5 years?
Shen Bo: ASML always values the Chinese market. In the future, ASML will continue to provide services and support to customers worldwide, including China, while strictly complying with relevant laws and regulations. ASML's development plan in China will also continue to revolve around customer service and support, including product development, team building, local capacity building, business layout, etc.
We provide panoramic lithography solutions for customers in China, including lithography machines, computational lithography software, and optical and electron beam measurement equipment, and develop products that meet the needs of Chinese customers. In June of this year, the computing lithography software product developed by the Chinese team that meets the needs of local customers was officially released.
We have 16 offices, 12 storage centers and 3 development centers in Chinese Mainland, dedicated to product development of computational lithography and electron beam measurement, to provide more efficient support for Chinese customers. At present, the total number of employees in Chinese Mainland has exceeded 1600, including more than 800 customer service engineers. In the future, we will also continue to expand our talent team to better support the development of Chinese clients.
China Business Daily: I think ASML and you have noticed in recent years that China has invested more resources and energy in the high-tech industry, and the demand for products and technologies that are conducive to improving technological level is also increasing. Is this a huge business opportunity for ASML? As a globally renowned high-tech enterprise, how does ASML view the changes in Chinese demand?
Shen Bo: In China, the strong support of the government for the semiconductor industry and the growth of the terminal market have injected a continuous stream of power into the sustainable development of the Chinese semiconductor market, with the development of mature process markets being particularly prominent. Chinese domestic brands have also occupied a significant share in important semiconductor terminal markets such as consumer electronics, personal computers and servers, electric vehicles, and new energy, laying the foundation for the sustainable development of China's mature process market.
As the world's largest mature process chip market, China plays an important role in the highly globalized semiconductor industry. In the future, ASML will continue to support the development of customers in China while complying with relevant laws and regulations, helping them achieve cost reduction and efficiency increase in the mature process of chip manufacturing.
China Business Daily: I think when it comes to the changes in Chinese demand, it's time to discuss some specific issues. Recently, the United States updated the chip export control measures introduced in October 2022. In the updated measures, ASML's product NXT1980Di was involved, but the measure also added a prerequisite - "These immersion lithography machines are used to produce chips for advanced processes." Does this mean that a large number of Chinese companies that do not use them for the production of advanced process chips can still import NXT1980Di normally? How does ASML assess the impact of this measure on company performance?
Shen Bo: According to the information we have received so far, only a few fabs that use this model to produce advanced processes will be subject to the latest round of export licensing restrictions, but the vast majority of Chinese Mainland fabs that apply to sub critical and mature processes will not be affected.
Given the length and complexity of the updated export control measures in the United States, ASML also needs to carefully evaluate the potential impact. As far as our business is concerned, based on the information we have received so far, we believe that the number of Chinese wafer fabs involved in advanced chip manufacturing applicable to this new regulation is limited.
From a medium to long term perspective, these export control measures may affect the ratio of our different machine sales across regions, but we do not expect these measures to have a significant impact on the company's financial situation in 2023 and our long-term outlook for 2025 and 2030 announced on November 2022, Investor Day.
China Business Daily: What percentage of existing orders may be affected by the updated US export control measures? What impact will this have on ASML's future performance expectations? What are the countermeasures for ASML?
Shen Bo: Based on the business development and demand level of ASML in China in 2023, we preliminarily anticipate that the release of the new regulations will have an impact on 10% to 15% of orders in China. Even considering geopolitical influences, we expect demand from the Chinese market to remain strong in 2024. Therefore, we anticipate that the overall business volume of ASML in China will not be significantly affected in the short term.
From a global perspective, we believe that 2024 will be an adjustment year. On the one hand, we believe that the annual income in 2024 will be basically the same as in 2023; On the other hand, 2024 will be a crucial year to lay the foundation for significant growth in 2025.
As stated in our long-term outlook for 2025 and 2030 shared on Investor Day in November 2022, we remain confident in the sustained growth of ASML.
China Business Daily: If this is the last question, I hope you can express ASML's hope and vision to the Chinese market in one or two short sentences. What are you planning to say?
Shen Bo: The Chinese market plays a very important role in promoting the development of the global semiconductor industry. ASML always values the Chinese market. In the future, ASML will continue to support the needs of Chinese customers, promote openness and cooperation in the global semiconductor industry, and promote human well-being while strictly complying with relevant laws and regulations.