Core Viewpoint - ASML's CEO expressed concerns over China's potential abandonment of its lithography machines and the implementation of rare earth countermeasures, highlighting the intense technological competition between the US and China [1] Group 1: ASML's Concerns - ASML's anxiety stems from recent US regulations that expanded sanctions to subsidiaries controlled by Chinese companies, leading to the freezing of assets of a Chinese semiconductor firm [3] - The Dutch government, feeling supported by the US, took aggressive actions against Chinese investments, underestimating China's ability to retaliate swiftly and effectively [3] Group 2: Impact of Rare Earth Regulations - China announced strict export controls on five types of medium and heavy rare earths, affecting the entire supply chain from mining to manufacturing [3] - ASML's lithography machines require over 10 kilograms of rare earth magnets, with over 90% of these materials sourced from China, leading to a potential production drop of 15-20 machines per month and a loss of up to €3.2 billion annually [5] Group 3: China's Advancements in Lithography Technology - By Q3 2025, China is projected to become ASML's largest customer, with a 42% share of equipment deliveries, despite being blocked from acquiring advanced EUV lithography machines [7] - Chinese companies are making significant strides in developing their own lithography technologies, with local equipment coverage expected to rise from 15% in 2022 to 35% by 2025 [7] Group 4: ASML's Historical Context and Challenges - ASML has been a key player in US-led technology restrictions against China, facing a dilemma between adhering to US regulations and maintaining access to the Chinese market [12] - The company's sales to China peaked at 49% in early 2024 but are expected to drop to 25% by 2025 due to ongoing sanctions, resulting in a projected revenue loss of €2 billion [12] Group 5: Future Dynamics and Industry Implications - The Dutch government has shown signs of softening its stance, seeking negotiations with China, while the automotive industry in Germany expresses significant concern over reliance on Chinese rare earths [14] - The ongoing semiconductor industry struggle reflects a broader battle for control over supply chains, emphasizing the need for cooperation rather than confrontation to ensure sustainable development [15]

Core Viewpoint - The report from Goldman Sachs indicates that China's domestic lithography machines can only produce chips with a 65nm process, lagging approximately 20 years behind international leader ASML [1][3]. Group 1: Current State of Chinese Semiconductor Technology - Although China can produce 7nm process chips, it likely relies on older DUV lithography machines from ASML, as China lacks the capability to manufacture such equipment [3]. - The latest High-NA EUV lithography machines from ASML are crucial for processes below 1.4nm and have begun delivery to major companies like Intel, TSMC, and Samsung [3]. - ASML's lithography machines have taken 20 years and $40 billion in R&D and capital expenditures to evolve from 65nm to 3nm and below [3]. Group 2: Market Dynamics and Competition - The global lithography machine market is dominated by ASML, which holds over 80% market share, and 100% of the advanced EUV lithography machine market [4]. - The relationship between lithography machines and chip manufacturing processes is direct, with specific machines designed for corresponding process nodes [4]. Group 3: Lithography Machine Classification - The classification of lithography machines includes various generations, with the current domestic machines being ArF type, suitable for 90nm process chips, indicating a significant technological gap compared to ASML [5]. - The table of lithography machine classifications shows the evolution from G-line machines for processes greater than 350nm to EUV machines for processes below 7nm [5].