On July 17th, ASML, the world leader in photolithography equipment manufacturing, announced its financial results for the second quarter of 2024. ASML reported total net sales of €6.243 billion (approximately 49.1 billion RMB), with a net profit of €1.578 billion and a gross margin of 51.5%. However, these figures fell short of last year's second-quarter results, which had seen revenues of €6.9 billion and a net profit of €1.94 billionThis represents a notable decline compared to the same period last year.

Despite this, ASML indicated that their overall net sales exceeded expectations, primarily due to an increase in immersive system salesAs was observed in previous quarters, the overall semiconductor inventory levels have continued to improve, suggesting that the utilization rates for lithography tools among logic and memory customers have increased further

Although uncertainties still linger in the market, primarily influenced by global macroeconomic factors, recovery within the industry is expected to sustain itself in the latter half of the year.

Christophe Fouquet, President and CEO of ASML, shared optimistic projections for the third quarter of 2024, expecting total net sales to reach between €6.7 billion and €7.3 billion, with a gross margin ranging from 50% to 51%. The anticipated research and development costs are around €1.1 billion, with additional selling, general and administrative expenses expected to rise to approximately €295 million, while maintaining unchanged full-year guidance for 2024.

Fouquet highlighted the transformative year ahead, stating, "2024 is to be a transitional year where we will continue investing in capacity expansion and technological advancementsPresently, we are witnessing significant growth driven by artificial intelligence, which is spearheading a recovery and growth across various industries, standing ahead of other market segments.”

The semiconductor industry is on the brink of entering the High-NA EUV (Extreme Ultraviolet) era

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EUV lithography machines are recognized as vital tools for advanced semiconductor productionEssentially, High-NA EUV technology represents a further development of existing EUV techniquesThe term NA refers to numerical aperture, a measure of an optical system's ability to gather and focus light, where a higher numerical value reflects enhanced focusing capabilitiesBy upgrading the optical systems that project circuit patterns from masks onto silicon wafers, High-NA EUV lithography technology significantly improves resolution and facilitates further transistor miniaturization.

Industry experts predict that as High-NA EUV technology matures and becomes more widespread, large-scale production applications could emerge between 2025 and 2026, indicating that the semiconductor sector is gearing up for the High-NA EUV era.

Globally, the construction of new wafer fabrication plants is in full swing, with operations reliant on EUV lithography machines

Major companies such as TSMC, Intel, and Samsung are all actively pursuing their own factory projects, having already commenced the battle for advanced manufacturing processes in semiconductor foundries, and are set to introduce new equipment from 2025 to 2027.

In terms of TSMC, reports suggest that over the next two years, the foundry plans to receive a total of 60 EUV lithography machines with an estimated total investment surpassing NT$400 billion (approximately US$12.27 billion). It is expected that ASML will deliver High-NA EUV machines to TSMC by the end of the year.

Conversely, Samsung recently acquired land near ASML’s facility in Hwaseong, South Korea, aiming to commence construction next year, with plans to incorporate High-NA equipment upon completion, projected by as late as 2027.

Intel has secured most of ASML's High-NA EUV equipment orders through to the first half of 2025. Notably, Intel has completed the assembly of ASML's first High-NA EUV lithography machine, valued at a staggering €350 million, which will be utilized for producing chips at advanced processes below 1.8nm.

Reflecting on previous projections, ASML anticipates reaching a production capacity of 90 EUV extreme ultraviolet lithography machines, 600 DUV deep ultraviolet lithography machines, and 20 High-NA EUV machines by 2025.

At present, ASML remains the only manufacturer globally with the expertise to produce High-NA EUV equipment

In comparison to the 0.33NA technology, High-NA can enhance transistor density by almost threefoldIn terms of product progress, ASML has delivered additional NXE:3800E systems for the 0.33NA EUV machines, with expectations that a majority of shipments in the latter half of the year will feature the 3800E systemsFor the 0.55NA High-NA EUV lithography machines, ASML shipped the second system in Q2, while the first unit is already producing compliant wafers at the customer's site.

Looking beyond High-NA EUV, ASML has commenced research into next-generation Hyper-NA EUV systems, aiming to discover suitable solutionsAccording to reports by EETimes in June, ASML revealed blueprints for the next-gen Hyper-NA EUV equipment, which is currently in its early development stages.

The plan is to launch Hyper-NA EUV technology by 2030, with a numerical aperture of 0.75. When compared to the 0.55 numerical aperture of High-NA EUV and the standard EUV's 0.33 numerical aperture, Hyper-NA EUV will boast enhanced precision, allowing for higher resolution patterning and smaller transistor features

Furthermore, Hyper-NA technology could boost the overall EUV platform, improving both cost efficiency and delivery times for ASML.

As advanced process nodes continue to evolve, the technological landscape is moving toward the era of sub-1nm finFETsASML has asserted that Hyper-NA will be crucial for future finFET level processes, with many companies expected to adopt Hyper-NA EUV to mitigate risks associated with multiple-patterning techniques.

Kurt Ronse, the program director for lithography at IMEC, emphasized that High-NA EUV should encompass nodes of 2nm to 1.4nm, followed by 1nm to 0.7nm nodes, with Hyper-NA EUV taking over thereafterHe further expressed belief in the potential of Hyper-NA EUV, presenting it as an opportunity that could redefine objectives post-2030. Compared to the dual-exposure costs associated with High-NA EUV, Hyper-NA EUV will offer a more economical solution, ushering in new possibilities for the semiconductor industry.

In the wake of these advancements, global semiconductor equipment sales are experiencing surges

Currently, demands for HBM (High Bandwidth Memory), wafer foundries, and advanced packaging are escalating due to artificial intelligence's influence, resulting in favorable conditions for semiconductor equipment manufacturersAccording to public sources, semiconductor equipment is critically employed in the production of various integrated circuits and discrete semiconductor devices, primarily encompassing front-end process equipment (wafer manufacturing) and back-end process equipment (packaging and testing).

Front-end process equipment, which is vital for wafer fabrication, includes photolithography machines, etching equipment, thin-film deposition equipment, and CMP tools, while back-end equipment primarily assures quality and reliability in semiconductor product packaging and testing, with representative products such as dicing machines, packaging machines, and testing equipment included, particularly wafer dicing machines employed for cutting wafers into chips for subsequent packaging and testing.

The latest report from the Semiconductor Equipment and Materials International (SEMI) has offered positive forecasts for the global semiconductor manufacturing equipment market, projecting a 3.4% year-on-year increase in 2024, expected to reach $109 billion - a new record high

The following year might see revenues rise to $128 billion, surpassing the previously forecasted $124 billion.

In mainland China, equipment procurement has continued to escalate, anticipated to maintain a leading position during the forecast period, with estimated equipment shipments in 2024 expected to reach a record $35 billionHowever, forecasts indicate a potential slowdown in 2025.

SEMI also highlighted that looking into 2025, driven by heightened demand for advanced logic and memory applications, wafer fab equipment sales are expected to surge further, with a sought-after growth of 14.7% to $113 billion.

Additionally, in Japan, the Japan Semiconductor Equipment Association (SEAJ) projects that in the 2024 fiscal year, sales of semiconductor equipment in Japan will surpass ¥4 trillion for the first time, reflecting a growth of 15%. By 2026, it is expected to exceed ¥5 trillion, primarily attributed to the rising demands for GPUs and HBM due to the increasing prevalence of AI technologies.