Chinese semiconductor industry


Skywatcher

Captain
I just wrote this article about ASML and SMEE. It was an Editor Pick on Seeking Alpha, but the vitriol from comments is incredible. Please read the article and also the comments.
Please, Log in or Register to view URLs content!
Very good article, well done.

Indeed, ASML is definitely overpriced (not the least in that its pricing assumes that its near monopoly over EUVL high performance DUVL will hold for at least the next decade)
 

latenlazy

Brigadier
Correction Buick Envision is exported from Shanghai PRC to North America.

Please, Log in or Register to view URLs content!

So following up on my previous post. this would be the more professional analysis than mine, but the conclusion is essentially the same. The overseas fabs for TSMC are not really optimal business decisions.

This article and another one regarding the architecture of the Apple M1 Pro/Max chips made me think...
The debut of the M1 chip by Apple is basically the first chip in 20 years that can trade blows with Intel/AMD (and nVidia if you count the GPU aspect). The power of this chip could only be provided by TSMC 5nm process.

At the same time, it was the profits afforded by fabbing the likes of Apple's previous CPUs provided a lot of the funding to get to 5nm.

Just goes to show how important it is to develop both the fabrication know-how and IP applications in step together.
Not true. Even if the chip was done at 7nm or even 10nm it would be better than what they could get from Intel. The M series chips are architecturally superior designs. It’s not just a function of transistor size.
 

tokenanalyst

Senior Member
Registered Member
A high-NA scanner is expected to cost $318.6 million, compared to $153.4 million for today’s EUV systems, according to KeyBanc. The total cost is even higher. Other new equipment, new photomasks, and different photoresists are required to enable high-NA EUV. Various vendors are working on these technologies, but at this point some gaps remain.

High NA EUV is adding significant costs increases in semiconductor manufacturing. those extra costs have to be absorbed by consumers.

Please, Log in or Register to view URLs content!
 

Annihilation98

Junior Member
Registered Member
I just wrote this article about ASML and SMEE. It was an Editor Pick on Seeking Alpha, but the vitriol from comments is incredible. Please read the article and also the comments.
Please, Log in or Register to view URLs content!
Finally a good article. This is what I want to hear, a real "progress". Not just talk but no action. I hope all Chinese fab will use and support SMEE duv to produce 7nm. Boycott ASML DUV or Canon.
 

ansy1968

Brigadier
Registered Member
Finally a good article. This is what I want to hear, a real "progress". Not just talk but no action. I hope all Chinese fab will use and support SMEE duv to produce 7nm. Boycott ASML DUV or Canon.
@Annihilation98 sorry I don't want to be rude but just to remind you, you're the one who talks a lot but is not open minded to accept that the Chinese are actually doing something. Bro being critical is good cause we all want to know the truth but as human being we had the insight to discern. peace bro!
 
Last edited:

gelgoog

Colonel
Registered Member
I just wrote this article about ASML and SMEE. It was an Editor Pick on Seeking Alpha, but the vitriol from comments is incredible. Please read the article and also the comments.
Please, Log in or Register to view URLs content!

The article is quite informative. I did not know that DUV tools still made almost half of the revenues of ASML. Considering most of the growth in DUV is in China, at least until the recently announced initiatives to boost the manufacturing chain in Europe, Japan, etc. This explains why ASML leadership is so concerned about a possible embargo on sales of DUV equipment capable of 14nm and under to China as proposed by that US AI comission. If the sanctions do happen it will mean losses in sales with SMEE getting those clients.

That would be a huge loss in sales and it would mean SMEE would get more entrenched into Chinese semi manufacturing facilities and get more capital to speed up future adoption of EUV as well. We know there are at least two Chinese manufacturers of lithography equipment working on both 28nm immersion lithography and EUV. SMEE being the commercial one and the Chinese Academy of Sciences Institute of Optics and Electronics being the government one. Expecting ASML to hold on to its monopoly position long term might be a foolish proposition if we consider what happened in the 1980-1990s where the whole market switched in less than a decade to a dominance by Nikon and Canon dethroning the US lithography vendors. If China plays things properly the same thing could happen again. Right now ASML's lead in EUV seems unassailable but given the huge cost of these machines if someone could deliver a better value proposition than they I think they would lose the market fairly quickly just like what happened back then.

 
Last edited:

tinrobert

New Member
Registered Member
The comments are extremely hostile, no doubt, but it must be noted that OEM parts for semiconductor instruments are indeed low volume, high cost and highly specialized. That is why many of the commenters are skeptical of that argument, but not the hostility. The hostility comes from chauvinism, lack of technical knowledge and arrogance.

You make a point that things could be foreseen i.e. multiple machine shops for custom metal fabrication or stockpiling electronics and PCBs. However, the lead time for these items is long, and some precision mechanical parts that are customized for ASML such as wafer stages and precision positioning systems have very limited suppliers. These high cost items might only be ordered when they need them. So that is indeed something that could lead to backlogs.

This is not directly related to the technical side, just my opinion: the PE ratio is far too high and unrepresentative of a semiconductor manufacturing company. But you compared to Tesla... Their PE is even higher, and rising without, in my opinion, even the pretense of justifying it through fundamentals. They've failed to deliver key products multiple times, whether on time or not at all. Do you believe their valuation is accurate?
One main reason these comments are hostile is the readers think I am a bank analyst and can make the stock go up or down based on my article. So since the article was neutral to ASML, they thought by putting down my analysis, their comment would move the stock price up. I am not a stock analyst. I do market research since 1985 through my company, and I write these articles as a calling card to introduce my reports and my capabilities. Other market research companies out there, which sprang up in the past 10 years, are coming from India and reports are sold by tables of contents, and they have not gone over well with customers.
You are correct on lead times and customized parts, but ASML has a habit of backlogs, which were 75 EUVs in 2Q and averaged 45 EUVs each quarter for 15 quarters. And that's why I point out this history that it is not just this quarter, and since there are also so many misses in earnings or revenues in Table 1, ASML has supply chain management problems.
Finally on the Tesla analogy, the thing I was pointing out is that Musk experienced microcontroller shortages and did something about it by getting alternative sources so the shortage didn't impact Tesla shipments.
 

tinrobert

New Member
Registered Member
The article is quite informative. I did not know that DUV tools still made almost half of the revenues of ASML. Considering most of the growth in DUV is in China, at least until the recently announced initiatives to boost the manufacturing chain in Europe, Japan, etc. This explains why ASML leadership is so concerned about possible sanctions on DUV equipment capable of 14nm and under as proposed by that US AI comission. If the sanctions do happen it will mean losses in sales with SMEE getting those clients.

That would be a huge loss in sales and it would mean SMEE would get more entrenched into Chinese semi manufacturing facilities and get more capital to speed up future adoption of EUV as well. We know there are at least two Chinese manufacturers of lithography equipment working on both 28nm immersion lithography and EUV. SMEE being the commercial one and the Chinese Academy of Sciences Institute of Optics and Electronics being the government one. Expecting ASML to hold on to its monopoly position long term might be a foolish proposition if we consider what happened in the 1980-1990s where the whole market switched in less than a decade to a dominance by Nikon and Canon dethroning the US lithography vendors. If China plays things properly the same thing could happen again. Right now ASML's lead in EUV seems unassailable but given the huge cost of these machines if someone could deliver a better value proposition than they I think they would lose the market fairly quickly just like what happened back then.

Interesting about your comment on China, because I have said in 2 articles on ASML that management does not speak of China. You're right it is a deep concern for them. In Q2, ASML only had 17% of its revenues from China versus 37% for Lam Research and 50% for Tokyo Electron. The 17% was impacted by sanctions on EUV. If there were sanctions on DUV it would probably drop to 5%. When SMEE ramps up, I think it would be the same thing as DUV sanctions. SMEE needs to get its overlay accuracy comparable to ASML so SMIC could get to 7nm (from 28nm) with multiple patterning. China represents 29% of all equipment sold in Q2, so it is significant.
 

Top