Since the beginning of this year, the United States has once again required the Netherlands and Japan to strengthen the control of chip equipment such as lithography machines and stop supplying China with lithography machines such as the 2000i that can be used for 7 nanometers. It has even required ASML to stop maintaining the lithography machines that have been sold to China. Now, the consequences are beginning to emerge.

According to photos posted by netizens, many lithography machines are placed on the open ground outside a factory. These lithography machines seem to have become scrap iron, and netizens speculate that some lithography machines have been abandoned due to ASML stopping maintenance services.

ASML's maintenance services are very important for chip manufacturers. It is reported that some lithography machine parts are consumable parts, which need to be provided and activated by ASML itself every period of time. Otherwise, the lithography machine cannot be used. There is even a saying that the lithography machine needs to be activated by ASML periodically to be used.

ASML's actions have caused a huge impact on it. The performance report for the first quarter of this year showed that ASML's new orders decreased by 60%, and net profit also fell by more than 40%. Foreign media believe that ASML's good days are over, and ASML's supply cut to China has begun to backfire on itself.

Analysts also pointed out that not only ASML is suffering from backlash, but many lithography machine suppliers in the United States have also experienced declining performance. ASML's lithography machines require a long industrial chain. The latest 2-nanometer EUV lithography machine weighs 180 tons and requires more than 5,000 companies worldwide to supply related parts. Among them, American suppliers are important industrial chain companies. In fact, EUV lithography technology is provided by the United States. ASML's lithography machine sales have declined significantly, and naturally, the orders received by American suppliers have also dropped significantly.

Mainland China is already ASML's most important market, especially as chip processes have developed to 7 nanometers and beyond. After TSMC, Intel, and Samsung mass-produced 5-nanometer and 3-nanometer processes, they no longer have the need to purchase the first-generation EUV lithography machines. Other overseas chip companies have long stopped research and development on 7-nanometer and below processes. The first-generation EUV lithography machines are now facing an embarrassing situation of no customers.

ASML is now pinning its hopes on 2-nanometer EUV lithography machines, but they are too expensive, costing up to US$380 million each. The high price has deterred Samsung and TSMC, with only Intel purchasing 6 2-nanometer EUV lithography machines in large quantities. TSMC is trying to use the existing first-generation EUV lithography machines to produce 2-nanometer processes to minimize costs and extend the life of the first-generation EUV lithography machines.

The Chinese mainland market has shown tremendous potential. In September last year, ASML suddenly obtained permission to sell advanced DUV lithography machines such as the 2000i that can be used for 7 nanometers to China. China made significant purchases, and from September to the end of the year, China's purchases of lithography machines doubled. Ultimately, in 2023, China purchased 450 DUV lithography machines, contributing 46% of ASML's revenue. This shows how important the Chinese market is.

After the United States strongly demanded that ASML not sell advanced DUV lithography machines to China, ASML's performance plummeted rapidly. Unwilling to fail, ASML has now replaced its CEO with a French national. ASML also intends to relocate to France, hoping to rely on France's influence to open up the Chinese market and avoid continuing to be subject to the United States.

ASML also deeply understands that the lithography machine business will not last long. It believes that the 2-nanometer EUV lithography machine may be the limit of lithography machines. Among the existing markets, only the Chinese mainland market has not been fully developed, while advanced technologies such as quantum chips and photonic chips have made significant breakthroughs. When these advanced chip technologies are commercially available, the current lithography machines will become scrap iron.