Chip buyers, including the German car industry, need the older generation computer chips that Chinese chip makers are currently investing in, the CEO of equipment maker ASML said in an interview with Germany’s Handelsblatt newspaper published on Monday.

The remarks by Christophe Fouquet, who took over as CEO at Europe’s largest tech firm in April, come as the European Commission has begun surveying firms including ASML for their views on Chinese firms’ investments in so-called “legacy” chips, an important source of revenue for ASML.

“The automotive industry in particular, including the German one, needs a lot more chips that are manufactured using simpler, long-known technologies,” Fouquet told the paper.

Facing US-led restrictions on more advanced technology, Chinese firms are expanding capacity to produce these older chips, raising Western concerns about the long-term potential for oversupply.

Fouquet said that global demand for such chips is rising dramatically but making them is not very profitable and Western firms are not investing enough. “Europe cannot even cover half of its own needs,” he said.

According to estimates by industry group Semi, Chinese chip makers will increase capacity by 14% in 2025, more than twice the pace of the rest of the world, to 10.1 million wafers per month in 2025, representing about a third of total global production.

“If someone wants to slow it down, for whatever reason, then alternatives are needed. There is no point in stopping someone from producing something you need,” Fouquet said. — Toby Sterling, (c) 2024 Reuters