2023 Outlook: China in sanction aftershock, TSMC sees limited impacts

To minimize the short-term impact on chip supply chain, a Temporary General License was established to allow specific, limited manufacturing activities related to items destined for use outside the PRC. ASML: US pressure piling up The significant proportion of equipment makers included in the latest Unverified List updated by the BIS indicates the US intention to choke the Chinese chip industry from upstream. With China only accounting for 15% of ASML's system sales as of third-quarter 2022, the company sees limited impacts on its 2023 shipment plan. Notably, ASML believes that it doesn't need an export license to ship US origin spare parts to most customers in China that are working on mature nodes, especially when ASML business in China mainly deals with mature nodes. According to Frans-Paul van der Putten, a senior research fellow at the Netherlands Institute of International Relations Clingendael and an independent consultant at ChinaGeopolitics, it will be very hard for the Dutch government to resist if Washington continues to exert heavy pressure on it, noting that Washington has to get Japan and the Netherlands to align themselves with US sanction measures before imposing further sanctions against China. As the trend of inventory adjustment will likely persist into first-half 2023, and possibly beyond, as a result of consumer demand dampened by macroeconomic factors, DIGITIMES Research forecasts that the foundry industry will see revenues decline by 2-3% in 2023. For Taiwan Semiconductor Manufacturing Co., spillover effects from current US sanctions against China will be limited. According to DIGITIMES Research, since the chips under sanctions belong to a niche sector, and other HPC-related chips not covered by US sanctions can still be outsourced to TSMC and other foundries, as long as the end-users of the chips concerned are in compliance with US regulations.