Chipmaker ASML is confident that demand for its technology will increase during 2023.
Key Details
- Dutch chip equipment maker ASML is confident that demand for chips will grow in the latter half of 2023.
- As one of the manufacturers of equipment necessary for advanced chips, ASML’s sales grew more than 29% last year. More chip manufacturers are building advanced chip-making facilities that require equipment manufactured by ASML.
- ASML predicts its sales will grow an additional 25% in the coming year.
- Demand for chips is slowing somewhat as electronic sales take a slight decline, but ASML’s customers don’t expect that decline to stick around.
Why it’s news
Major chip manufacturers like Intel and Taiwan Semiconductor Manufacturing (TSMC) are among ASML’s clientele. In part due to President Joe Biden’s Chips and Science Act, chip manufacturers have been motivated to establish new manufacturing facilities in the U.S.
Despite the expansion of chip-making facilities, demand for the products has not been growing. Semiconductor chips are used in a variety of everyday products—from microwaves to vehicles—but they are prevalent in electronics. Electronic sales, however, are experiencing a slight decline as high consumer costs push buyers to focus on necessities over luxuries.
But ASML’s customers think this dip in demand won’t stick around.
“Most of our customers tell us that they expect a recovery in the second half of this year,” ASML CEO Peter Wennink told CNBC.
Backing up a bit
TSMC’s investment in an Arizona plant will more than triple to a total of $40 billion.
The world’s largest chip manufacturer has increased its planned investments into an Arizona facility for a total of $40 billion. Previous plans for investment in the plant were $12 billion.
Greater investment will result in a second, more advanced facility being built outside Phoenix. Current plans anticipate the plant being ready by 2026. The new facility will produce 3-nanometer chips—currently the most advanced chips available.
In addition to further monetary investment, the facility will now plan to employ 4,500 people rather than 1,600.
In part, the decision to invest further is driven by TSMC’s plans to produce chips for Apple in the U.S. TSMC is the primary producer of chips for all Apple products. As Apple has been looking to diversify its supply chain, the tech company has made moves to find production outside of China and the surrounding areas.
TSMC isn’t the only chip manufacturer looking to expand in the U.S. IBM announced an investment in the Hudson Valley area shortly after President Biden signed the Chips and Science Act. The legislation featured $52 billion dedicated to promoting the production of microchips in the U.S.
So far, the Chips Act combined with the Inflation Reduction Act—which in part contains incentives for green energy—seems to be successfully drawing production to the U.S.
Micron, one of the largest U.S. chipmakers, announced plans in September to invest $15 billion in a new factory in Boise, Idaho. Construction on Micron’s new factory will begin in 2023. When completed, it will be the largest chipmaking cleanroom, or fabrication room, in the U.S. at 600,000 square feet.
