Tag: chipmakers

  • Europe’s perform inside the US-China semiconductor showdown

    ASML Holding NV, the place Van den Brink is now the chief know-how officer, just about owns {the marketplace} for an important piece of equipment needed to provide the brains of each factor that makes trendy life attainable — from autos and smartphones to pc methods, microwaves and airplanes. With the company’s high-end machines churning out chips that might also go into state-of-the-art weapons and artificial intelligence devices, ASML is efficiently being dealt with as important infrastructure for US nationwide security and has change right into a purpose of enterprise espionage for China.

    “I on no account anticipated to be the place we’re proper this second,” said Van den Brink.

    Over his nearly four decades at the company, ASML has gone from a bit player competing with the likes of Nikon, Canon and Ultratech to the world’s only maker of very high-end semiconductor lithography equipment. Its ascent has made it Europe’s most valuable technology company, with a market capitalization of over $247 billion—more than twice that of its customer Intel Corp. In an industry where devices typically cost $10 million, ASML commands about $180 million for its current top-end machine. And although the chip market has softened recently, ASML is still growing and its long-term outlook seems intact, thanks to the insatiable demand for computing power.

    “This is a company that the world can’t exist without,” talked about Jon Bathgate, a fund supervisor at NZS Capital LLC in Denver, which has about $2 billion beneath administration, with ASML as definitely certainly one of its largest holdings. “They’ve acquired a 20-year head start… Investors have clearly realized how obligatory ASML is as a corporation and the way in which powerful it could possibly be to duplicate. It’s a pure monopoly with secular progress winds. That’s distinctive.”

    As chips become for geopolitics in the 21st century what oil was in the last one, ASML’s singular success has thrust it squarely in the crosshairs of the intensifying tensions between the US and China. With the US focused on the strategic importance of semiconductors, Presidents Donald Trump and Joe Biden have done everything to ensure that China is a couple of generations behind in chips. No company is more critical to that effort than ASML.

    “Most people in industry and government believe that lithography tools are the strongest of the choke points that Western governments have put in place,” talked about Chris Miller, an affiliate professor of worldwide historic previous at Tufts University and the author of Chip War. “Because of that, there’s been intense focus” on ASML.

    Cementing the lead

    Barred from selling many of its top-end machines in China, and a victim of data thefts, ASML is doing the only thing it can to preserve its almost insurmountable lead: building evermore sophisticated machines. Its next contraption, about the size of an Amsterdam studio apartment, is set to hit markets in 2025. With a price tag of more than $380 million—costlier than a Boeing 787 Dreamliner—it will be capable of etching delicate patterns on silicon wafers smaller than a virus. Already way ahead of rivals, ASML is making sure no one can do what it does for the foreseeable future. Its only real hurdle will be technological limits—building machines that are viable and economical for mass production.

    “Even if someone is able to catch up with where we are today, we will make sure that in 10 years we are operating in a completely different paradigm,” Roger Dassen, the company’s chief financial officer, talked about in an interview. “That’s one of many easiest methods we’re capable of protect our place… So you’ll meet up with the place we’re proper this second, nonetheless we’ll seemingly be at a singular place by then.”

    In 2019, under pressure from the Trump administration, the Dutch government withheld an export license enabling ASML to sell its top-of-the-line extreme ultraviolet, or EUV, lithography machines to SMIC, China’s main semiconductor foundry. Then, pushed by the Biden administration, the Netherlands tightened the screws further. Its March plan for additional restrictions would rein in exports of more advanced versions of ASML’s older immersion deep ultraviolet, or DUV, lithography machines that can be used with other technologies to make powerful chips for dual civil and military use.

    “The business risk for ASML strongly depends on two things: First, whether there will be a ban on a certain DUV equipment type, for example, the most advanced one, or if in the future, there will be a full DUV ban, which would have a much more severe impact,” talked about Julia Hess, enterprise supervisor at Stiftung Neue Verantwortung, a German suppose tank. “Second, how the controls will seemingly be aligned with worldwide places which have competing companies, similar to Japan.”

    The China blockade

    China is working on building its own semiconductor industry, pouring billions into a chip-building initiative to catch up to the US. Its purchase of older technology has boosted earnings for much of the semiconductor equipment sector. The Asian giant, which a decade ago was a rounding error for ASML, was its third-biggest market behind Taiwan and South Korea in 2022, accounting for about 15% of revenue.

    Not being able to sell more powerful equipment in China may become a drag on growth in the future, but for now ASML can barely keep up with its non-China demand, and says the bans have “no material effect.” Its backlog is sort of twice its annual earnings, and its largest purchaser Taiwan Semiconductor Manufacturing Corp. isn’t lowering capital expenditure. Also, the US and Europe have unveiled plans to take a place about $100 billion inside the chip enterprise.

    But ASML chief govt officer Peter Wennink nonetheless believes the China blockade is a mistake, saying it may hasten that nation’s efforts to develop its private chip instruments.

    “If they cannot get these machines, they will develop them themselves,” he said in an interview. “That will take time, but ultimately they will get there… The more you put them under pressure, the more likely it is that they will double up their efforts.”

    Some Chinese individuals and entities have resorted to stealing ASML know-how. The agency, with about 1,500 people in China, disclosed in February {{that a}} former employee had taken some technical knowledge. Last yr, it accused a Beijing-based company, regarded by Chinese officers as certainly one of many nation’s most promising tech ventures, of likely stealing its commerce secrets and techniques and methods.

    ASML argued in a 2018 trial in California that Dongfang Jingyuan Electron Ltd. and defunct Silicon Valley company Xtal had been created a month apart in 2014 by a former employee named Zongchang Yu with the particular perform of stealing and transferring its know-how to China. Yu now runs Dongfang in Beijing with ample assist from the Chinese authorities, in line with agency statements and completely different Chinese paperwork.

    Protecting IP

    The case prompted ASML to protect its psychological property additional fiercely than even sooner than. Its knowledge security workers rose 20% from 2021 to 300. It created a “circle of perception” to train suppliers on cybersecurity risks and keeps tabs on any potential reverse engineering of its machines.

    CFO Dassen also points to the futility of attempts to steal the company’s technology. With 5,000 suppliers of everything from software to tin and tungsten and strategic partnerships with companies like Carl Zeiss AG, which makes its critical multilayer mirrors, ASML runs a global ecosystem that would be difficult to match, he notes.

    “A lot of ASML’s technology is not on blueprints,” he talked about. “It’s inside the heads of people. And you don’t need merely the blueprints; you need each factor surrounding it and your full present chain. You should assemble an alternate Zeiss, and so forth. That is a colossal job. You’re not talking about months or years. You’re talking a few decade or additional sooner than you probably can replicate one factor like this.”

    A peek at how the company—based in a country better known for its canals, bicycles and cannabis-selling coffee shops—has cobbled together a vast, global ecosystem shows why there are no easy workarounds to ASML for China.

    “You cannot do it all,” talked about Van den Brink in a written response to questions, alluding to the company’s targeted acquisitions and partnerships. “You should do the problems that you simply simply’re good at. And work with completely different occasions which could be increased in a single factor than you probably can ever be. And then you’ll ship among the finest out of your self and among the finest from these spherical you collectively.”

    The technology

    Headquartered in the tidy small town of Veldhoven in the Netherlands’s industrial heartland, ASML was all but written off a few decades ago as a bottomless pit for Philips, the Dutch conglomerate from which it was spun off. It struggled in the 1980s to find buyers for its equipment. Its 1995 initial public offering gave it the funds it needed for research, and a breakthrough in DUV lithography machines boosted its market share to nearly 50% in the early 2000s. Then, a moonshot development took it to a whole new level: EUV lithography.

    A US government-led EUV consortium had roped in ASML to see how marketable the technology was. Making a huge bet on EUV, something its rivals balked at, the company focused efforts over the next two decades on bringing it out of the lab and into saleable machines. It worked with scientists from three US labs, got equity investments from Intel, TSMC and Samsung Electronics Co. in an unprecedented market collaboration, acquired some key US companies like Cymer and HMI, and signed up hundreds of suppliers across the globe. By 2018, it was ready to mass-produce EUV machines, and by 2021, it owned more than 90% of the $17.1 billion global market for lithography equipment.

    EUV lithography uses light of a shorter wavelength to allow chipmakers to cram exponentially higher numbers of transistors into integrated circuits to make powerful chips. The gigantic EUV machine, about the size of a school bus when fully assembled at a customer’s site, takes three to four Boeing 747s to deliver. Weighing 180 metric tonnes, it consists of more than 100,000 parts, 3,000 cables and 40,000 screws, and requires more than 2 kms of hoses.

    The kingmaker

    As the world’s only maker of such machines, ASML has left its rivals in the dust and shown how difficult it would be for a potential Chinese competitor to emerge.

    “It’s not even remotely possible” for anyone to satisfy up with ASML anytime shortly, talked about Douglas O’Laughlin, an analyst at Fabricated Knowledge, an enterprise e-newsletter. “There is the potential for some kind of inflection that we’re not privy to correct now. But the entire people who would know learn the way to do it possibly work for ASML.”

    Access to ASML’s most advanced machines has dictated which companies succeed in the industry. Intel, which was slow to adopt EUV machines, fell off its perch as the world’s largest chipmaker last year after holding that spot for close to 30 years. TSMC, which took advantage of the new technology more quickly and is ASML’s biggest customer, is on course for that title this year, according to analysts’ projections, overtaking Samsung and relegating the US company to the third spot.

    As of the end of 2022, ASML had delivered 180 EUV systems. It plans to ship 60 EUVs this year, and wants to boost manufacturing capacity so it can almost double the number of the older DUV systems it produces to 600 by 2026. It also wants to build by 2030 as many as 30 of its next machine, dubbed high-NA EUV, which are slated for high-volume chip manufacturing in about two years.

    Semiconductor makers are keen to buy this newest machine because many emerging technologies require chips that are more powerful than the ones currently available, said Dylan Patel, chief analyst and founder of SemiAnalysis, an industry research and consulting firm. Features like Apple Inc.’s augmented reality headsets with high-density and long-lasting batteries or servers that could someday run the AI tool ChatGPT-7 are “just not possible with current technology,” he talked about. “high-NA EUV very successfully is perhaps the issue that unlocks that.”

    That said, not everyone is convinced the transition to these increasingly complex machines will be smooth. For all the “respect and admiration” he has for ASML, the difficulties chipmakers are liable to encounter are normally not evident inside the agency’s stellar share price enhance, says Timm Schulze-Melander at Redburn in London, who’s the one analyst tracked by Bloomberg with a “promote” rating on ASML shares.

    “High-NA EUV has big technical as well as economic challenges that the consensus is not reflecting,” he talked about. “Even for present EUV lithography, it’s worth remembering that the know-how is hard to run in high-volume manufacturing. Despite the hype, proper this second solely three chipmakers — TSMC, Samsung and SK Hynix—presently ship chips made with EUV lithography.”

    So how far can ASML economically take its miniaturizing technology? That’s the big question — more than the fear of a Chinese entity catching up with ASML. Even within the company, some worry that it is technology that will eventually limit the company.

    “The big long-term risk is that new lithography systems are too costly and unwieldy to produce,” talked about Chip War author Miller. “ASML will ship its high-NA strategies on-line, nonetheless the know-how after that, hyper-NA, continues to be in development. Some ASML workers have speculated it is perhaps too powerful to mass-produce.”

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  • Global chip business stares at slowdown; India investments could proceed

    NEW DELHI : Chipmakers corresponding to Taiwan Semiconductor Manufacturing Company (TSMC) and Hon Hai Precision Industry Co., higher often known as Foxconn, could also be compelled to rethink their investments within the coming quarters as they take a cautious stance to answer world headwinds corresponding to rising stock coupled with issues of rising inflation and geopolitical tensions.

    TSMC reported on Thursday an 80% soar in internet revenue for the September quarter at $8.8 billion. However, even because the outcomes beat market estimates, chief government C.C. Wei stated that internet capital expenditure for the remainder of FY23 has been minimize by 10% to $36 billion. He stated additionally that there may very well be a “possible decline” in the global semiconductor market, and TSMC is “not immune” from the downturn regardless of its dominant market place.

    Foxconn, too, suggested warning in its outlook for the remainder of the 12 months whereas saying its September gross sales. Even because it reported report month-to-month income of $25.9 billion final month, a sequential rise of 83%, the corporate cited “the dynamics of inflation, the pandemic, and the provision chain” as the key factors of concern.

    Industry analysts say that the reduced capex plan among global supply chain makers is not unexpected since inventories have risen to very high levels due to subdued consumer demand. Navkendar Singh, associate vice-president of client devices at market researcher International Data Corporation (IDC) India, said the slowdown projection is in line with tapering demand globally. “Even enterprises are spending cautiously, and orders are getting delayed or cancelled, as companies put a freeze on hiring and rethink growth plans,” he stated.

    The demand slowdown has been projected for the fast quarters within the world data know-how (IT) companies sectors, too. While Indian software program companies majors Tata Consultancy Services, Infosys, HCL Technologies and Wipro posted income progress, analysts famous a drop in new and energetic offers amongst most IT companies indicating a cautious stance amongst enterprises.

    Stakeholders within the Indian semiconductor business are, nonetheless, assured that there wouldn’t be a direct impression on India’s means to draw investments in its fledgling semiconductor business.

    Vivek Tyagi, chairman of the India Electronics and Semiconductor Association (IESA) stated there may very well be some slowdown in investments by world chipmakers within the coming quarters.

    “However, you will need to observe that semiconductor investments within the nation wouldn’t come off the again of cutting-edge chips, which is the place the slowdown can be. For occasion, the automotive sector in India has a requirement for chips which might be between 28nm (nanometer) and 90nm die dimension— and this sector is more likely to proceed with a simmering demand going ahead,” he stated.

    Tyagi additionally stated that the Indian semiconductor business is presently on the stage of attracting investments for chip making factories, that are largely long-term efforts. “As we see it, the demand slowdown and warning in enlargement of investments would stay for one more 18 to 24 months, following which the worldwide provide chain would stabilize. India might entice meeting, testing, marking and packaging (ATMP) and outsourced semiconductor meeting and check (OSAT) services,” he stated.

    The Indian authorities’s manufacturing linked incentive (PLI) plan for semiconductors provides a 50% money profit for companies that put money into semiconductor services, with no minimal cap on investments.

    Tyagi stated that this, coupled with state-wise land and employment advantages, might see India persevering with to obtain investments for the semiconductor sector even whether it is at a barely diminished tempo.Rajeev Khushu, advisor and board member of IESA, stated Bengaluru already has over 80 corporations related to semiconductor manufacturing.

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  • How the worldwide chip scarcity is impacting Japan’s carmakers

    Japan’s main automakers have lower manufacturing at numerous factories as a result of worsening world semiconductor scarcity led to as chipmakers battle to satisfy hovering demand from consumer-electronics firms.
    Lockdowns and journey restrictions are prompting housebound consumers to snap up extra telephones, recreation consoles, good TVs and laptops, which in flip has fueled demand for the chips utilized in these gadgets. That means carmakers from Toyota Motor Corp. to Volkswagen AG are vulnerable to not getting sufficient elements to gas a fledgling restoration in their very own business.
    Chen Shihua, a deputy secretary common of the China Association of Automobile Manufacturers, stated the chip scarcity had brought on a comparatively large affect on China’s car business from late December and should persist into the second quarter. He famous that some chipmakers have boosted their costs, so it’s exhausting to measure the affect when it comes to vehicle-sales reductions.
    That’s compelled automakers all all over the world to chop again on manufacturing.
    Here’s the state of play for Japan’s companies:
    Toyota Motor Corp.
    Toyota stated on the morning of Jan. 15 it should halt 4 manufacturing traces at three crops in Japan’s Aichi prefecture attributable to elements shortages. The traces will resume operation for the afternoon shift, a spokeswoman for the corporate stated.
    Toyota stated on Jan. 10 that it’s slicing manufacturing of its full-size pickup truck Tundra as a result of world scarcity of semiconductors. The firm expects to trim output of its Tundra mannequin manufactured in San Antonio by 40% this month on account of restricted chip provides.
    In China, Toyota halted traces at its manufacturing facility in Guangzhou on Jan. 11 attributable to elements shortages. Toyota collectively operates the power with Guangzhou Automobile Group Co.; the plant has produced upward of 300,000 automobiles yearly lately, together with the Camry. The traces resumed operation on the eve of Jan. 12 as the required elements have been capable of be procured, spokeswoman Shino Yamada stated.
    Honda Motor Co.
    Honda is seeing the affect of chip scarcity in China and is contemplating slicing manufacturing. “We will replace some models and adjust our work shifts when necessary,” a Honda spokesperson stated Jan. 13. On the identical day, Honda once more stated it might cease manufacturing at Swindon from Jan. 18 attributable to provide points, and purpose to restart on Jan. 22.
    In North America, Honda stated this week it should scale back manufacturing of the Accord, Civic and Insight sedans, in addition to the Odyssey minivan and Acura RDX, a crossover sports-utility car. Honda will alter manufacturing at its Marysville and East Liberty crops in Ohio, in addition to at amenities in Alabama, Indiana and Canada. Honda will lower output by a number of thousand items by the tip of January, and the adjustment will possible proceed, in accordance with the Nikkei, which earlier reported the decreases at Honda North America.
    Honda was among the many first world automaker to warn of chip shortages, saying a two-day halt in output at its UK plant on Jan. 5 and 6. Established in 1985, the Swindon facility produces Civic hatchbacks and employed about 2,900 staff as of November. The plant is ready to function till July 2021, when it has been marked for closure, a choice that was introduced in 2019.
    Nissan Motor Co.
    Production of the compact hatchback Note might be lower by about 8,000 items this month, a part of a complete output discount that will exceed 10,000 automobiles and final via March, Nikkan Kogyo reported on Jan. 15. A spokeswoman for Nissan declined to touch upon specifics of the manufacturing lower.
    Nissan stated on Jan. 8 that it’s slicing again on manufacturing at certainly one of its crops in Japan this month. “A global shortage of semiconductors has affected parts procurement in the auto sector,” spokeswoman Azusa Momose stated. “As a result of this shortage, the Oppama plant in Japan will adjust production in January, reducing production of the Nissan Note.”
    Subaru Corp.
    Subaru will lower output by a number of thousand items every in January at factories in Japan and the US, a spokesperson stated Jan. 14.
    “We are adjusting production of multiple models in our Gunma and US facilities due to chip-delivery delays,” the spokesperson stated. “The adjustment started from Jan. 11 for Gunma and from Jan. 8 in the US. We are checking the end dates. Other companies are involved in the delivery delays, so our plan depends on them. The impact on output in February and beyond is unclear.”
    Subaru can be shutting its foremost Gunma manufacturing facility, along with Yajima and Oizumi crops, in Japan for 2 days beginning Friday attributable to a chip scarcity. The carmaker stated it’s assessing affect on its fiscal 2020 earnings.
    Suzuki Motor Corp.
    There might be an affect on manufacturing, however the automaker continues to be checking particulars together with which fashions could also be impacted, a spokesman stated by cellphone Jan. 12.
    Mitsubishi Motors Corp.
    While Mitsubishi Motors continues to be checking relating to any affect on output, it hasn’t been compelled to regulate its manufacturing in the interim attributable to chip shortages, a spokeswoman for the corporate stated Jan. 12.
    Mazda Motor Corp.
    Mazda is at present analyzing whether or not there was any affect on manufacturing, spokesman Naoto Mawatari stated by cellphone Jan. 12.