ASML reportedly has seen the first cutback in orders for EUV equipment from TSMC, its largest customer, which market insiders speculate is on track to slash such orders by over 40% or otherwise delay taking shipments from the Dutch supplier along with its slowing fab capacity expansions in Taiwan. TSMC, however, said it won't respond to market speculations.
Intel and Samsung Electronics, despite lagging far behind TSMC in process technology and customer base, will also follow suit to reduce investment in EUV equipment, aiming to limit the considerable costs associated with the pursuit of advanced process nodes, equipment supply chain sources said.
Apparently, the sources remarked, the frantic scramble for EUV equipment supply among the three leading semiconductor players has significantly cooled down, making ASML turn conservative about its 2024 business outlook, with its annual revenues for the year under heavy downward pressure.
As the world's sole supplier of EUV machines, ASML is expected to resume its growth momentum in 2026 at the latest, when TSMC and other major customers are expected to restart or accelerate capacity expansion projects on full recovery of the semiconductor market, the sources continued.
Besides ASML, most other peers on the world's top-10 semiconductor equipment supplier list are also like 'sitting on pins and needles' amid poor semiconductor demand, a memory industry mired in predicaments, US-led semiconductor tech curbs against China, and particularly TSMC's planned slowdown in capacity expansions in Taiwan, the sources noted.
TSMC reportedly has notified its supply chain partners that it will focus fab construction in the US and Japan in the next year while slowing down capacity expansions at its fabs around Taiwan's major science parks. This, coupled with Japan likely to officially tighten, on July 1, its export controls on 23 advanced semiconductor equipment items to China based on a trilateral agreement with the US and the Netherlands, is expected to significantly dent the global semiconductor equipment sales momentum starting in the second half of 2023. Impacts of order cutbacks by customers are expected to intensify quarter by quarter in 2024.
According to SEMI statistics, global semiconductor equipment sales still managed to grow 5% on year to a new high of US$106.6 billion in 2022, but sales to China, the world's largest semiconductor equipment market, slipped 5% and shipments to South Korea also shrank 14%.
Statistics from CINNO Research also indicated that aggregate revenues of the world's top-10 semiconductor equipment suppliers increased 6.1% on year to a 3-year high of US$103 billion in 2022. Applied Materials firmly ranked first and was followed by ASML, Lam Research, Tokyo Electron, and KLA on the top-5 list.
Nevertheless, many of the top-10 vendors have turned conservative about their 2024 sales prospects and are moving to implement cost-reductions on personnel, marketing and other aspects in advance, so as to brace for the 'cold winter' facing their business operations.
A Japan-based supplier, for instance, has instructed its branch offices around the world to reduce expenses in the coming year.
Lam Research trimmed its workforce in China by 10% at the end of 2022, and in early 2023 laid off 1,300 employees, about 7% of its labor force, in its global operations. The company reportedly will carry out further personnel cuts to counter worsening market conditions.
