ASML, the global lithography giant, plans to move from the Netherlands to other countries or expand overseas, the Global Times quoted several foreign media as the latest news on the 7th. In response, the Dutch government has taken urgent action and is in talks with the semiconductor equipment maker to ensure that ASmed does not move its operations to other countries.

Asml, headquartered in the Netherlands, is the world's largest manufacturer of lithography machines, and all of the EUV lithography equipment required for the most advanced chips of global chip manufacturers comes from ASML.

The Dutch government is feeling the pinch as the world invests heavily in chip manufacturing. If ASML were to leave or expand abroad, it would be a huge blow to the Netherlands.

So why does the giant suddenly want to leave the Netherlands?

Semiconductor giant 'wants to go'

According to the Global Times, citing Reuters, on March 6, local time, a report by the Dutch local media, the Dutch Telegraph, shocked the global technology circle. The Dutch government is in talks with semiconductor equipment maker ASmax to ensure that the Netherlands' largest company does not move to other countries or aggressively expand abroad due to potential anti-immigration policies, the outlet reported, citing sources.

Asml has made an offer to the Dutch government to expand or relocate elsewhere, with France among the options, the report said. In order to keep Asmax in the Netherlands, the Dutch government has set up a special task force, code-named "Plan Bedofen", which is personally headed by the country's prime minister Mark Rutte. Several big companies, such as Shell and Unilever, have left the Netherlands in recent years because of tax laws. The Dutch government has set up a task force led by Mark Rutte to try to avoid a similar situation happening again.

Dutch Economic Affairs Minister Micky Adriaansens confirmed in an interview with Reuters that she plans to meet Asmed's chief executive, Wenninck, in The Hague on Wednesday. "I don't know if they will leave the Netherlands, they want such big growth and it puts pressure on our infrastructure. That's why we had a very intensive dialogue with them. Because we want to know, can we solve this problem?"

An important context for Asmer's desire to leave the Netherlands is that the Freedom Party, led by far-right populist Wilders, won a big victory in Dutch parliamentary elections last November. Known as the "Dutch Trump," Wilders has said he wants to be the next Dutch prime minister. He has repeatedly said he would focus on curbing immigration if he took office, including curbing the number of students studying abroad and reducing tax breaks for expatriates. He has spoken out against Islam and the European Union, supporting a referendum on whether the Netherlands should leave the European Union.

Non-dutch employees account for about 40 per cent of ASML's 23,000 employees in the Netherlands, and overseas students who stay to work in the Netherlands are one of the company's main sources of Labour. Asml is alarmed by the Dutch government's "apparent rightward turn". In January, Mr Wenninck warned that ASML was highly dependent on skilled foreign Labour and highly qualified foreign Labour, and said potential anti-immigration policies could prompt ASml to leave the Netherlands. "We need these people to innovate, and if we don't get them here, we're going to have to go somewhere else where we can grow," Wenninck said.

At the time, there were media reports that France was a possible destination for ASML's expansion. As for the rumors of "moving away from the Netherlands", ASML spokesperson told the media recently that ASML is actively considering the future of the company due to concerns about the deteriorating business environment in the Netherlands.

The jewel in the crown

Lithography machine, known as the "crown pearl" of the integrated circuit industry, is the key machine equipment for manufacturing electronic chips such as mobile phones and computers. Asml, based in the Netherlands, is the world's largest manufacturer of lithography machines, with a market share of up to 80 percent for high-end lithography machines, according to public data. Asml is the only global supplier of EUV lithography equipment required by global chip manufacturers to manufacture the most advanced process chips such as 3nm, 5nm and 7nm chips.

Asml's share price has enjoyed a strong performance since 2023, with its share price in Amsterdam, the Netherlands, rising by more than 80% year-to-date in 2023 and hitting new highs in recent months, with a latest market capitalization of €358.7 billion.

Financial data show that in the fourth quarter of 2023, ASML's net sales reached 7.2 billion euros, gross profit margin was 51.4%, and net profit reached a record high of 2.048 billion euros, exceeding market expectations. Driven by AI demand for advanced lithography machines, ASML booked an all-time high of 9.2 billion euros in the fourth quarter of last year, up 2.5 times from 2.6 billion euros in the third quarter of last year, and EUV lithography orders reached 5.6 billion euros. Among them, sales in the Chinese market increased significantly.

Asml's EUV lithography machine orders hit a record high, driven by AI, underscoring the bullish outlook for the likes of Intel, Samsung and TSMC. Winek noted that artificial intelligence will be a major driver of growth for his and downstream customers.

For the full year 2023, AsML's net sales reached €27.6 billion, up 23.2% year-on-year, and its gross margin was 51.3%, up 0.8 percentage points year-on-year. Net profit was 7.8 billion euros, up 28.3 percent from a year earlier. Total undelivered orders amounted to 39 billion euros. Asmed reported record orders, helped by strong demand in China, with imports of semiconductor manufacturing equipment from the Netherlands totaling about $6 billion in 2023, accounting for about 20% of Asmed's full-year net sales in 2023, according to China Business News, citing customs data.

Asml, Nikon and Canon are the three leading companies in the global lithography industry, accounting for most of the market share. Asml is absolutely leading in high-end immersion DUV and EUV, Nikon also has a small amount of immersion DUV shipments, and Canon focuses on the low-end field.

From our country domestic point of view, domestic lithography machine industrial chain is constantly improving. Ping An Securities pointed out that lithography machine is the core equipment of the semiconductor industry, directly determines the advanced degree of chip manufacturing, the importance of self-evident, in the global semiconductor industry continues to expand the trend of lithography machine market scale considerable for a long time; In addition, the development of lithography machine is difficult and the industry monopoly is strong. It is the hardest hit area of overseas sanctions on China's semiconductor industry, which directly affects the development of advanced manufacturing processes in the domestic semiconductor industry. Therefore, the importance of independent breakthrough of lithography machine is particularly prominent, and the domestic industry chain of lithography machine has great potential.

Huatai Securities said that benefiting from AI demand and strong demand in China, global semiconductor equipment sales in 2023 were better than the market expected at the beginning of 2023. Chinese enterprises will further increase their market share in China, and it is expected that the revenue of Chinese semiconductor equipment enterprises will increase by 44% year on year in 2024.