The ASML chief says that chip demand is expected to rebound by mid-2023

The head of Europe’s largest chip maker ASML said he expects demand for semiconductors to recover in the second half of the year as the company reported a record order backlog of more than 40 billion euros and expects sales to increase by 25 percent this year.

“The anticipation of a potential downturn in the minds of our customers is much shorter than the average time it takes for our machines,” said Peter Winink, CEO of ASML. “They want to prepare for — because of the strategic nature of our machines — an improvement in the second half of the year and 2024.”

The Dutch chip tooling supplier plays an important role in the global semiconductor industry. It is the only company in the world capable of producing the complex lithography machines (EUV) necessary to manufacture advanced semiconductors used in electronics.

Taiwan Semiconductor Manufacturing Co, Intel, and Samsung all rely on ASML machines and services for EUV tools to build cutting-edge chips.

Demand for chips used in smartphones, computers and data centers fell sharply last year, fueled by fears of a recession, high inflation, high interest rates and the Covid-19 crisis in China, one of the largest semiconductor markets.

The company, which has a market capitalization of €248 billion, has been embroiled in the trade war between Washington and Beijing since 2019, when a shipment of one of its EUV devices to China was blocked.

The United States has imposed increasingly stringent restrictions that prevent its companies from providing tools, equipment and personnel that could support the progress of China’s advanced chip industry.

Japan and the Netherlands, two of the most important countries in the global chip supply chain, are preparing to adopt similar restrictions in the coming weeks after months of pressure from Washington.

“We are businessmen. We just have to wait for governments and politicians to continue talking and come up with a reasonable solution,” Weinink said on Wednesday.

In October, Weinink said US sanctions could affect up to 5 percent of ASML’s order backlog, though he noted that the company’s main business in China relies on less advanced technologies that are not within the purview of the latest restrictions.

Weinink said on Wednesday that “nothing has really changed” since October, when Washington unveiled new export restrictions. He said ASML still couldn’t ship EUV machines to China, but it could ship less advanced DUV systems as well as other tools.

The Feldhoven-headquartered company also makes deep-dish (DUV) lithography machines for etching circuits into silicon wafers, in a process typically used for simpler chips.

ASML expects to produce 60 EUV machines and 375 DUV machines in the current fiscal year.

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