ASML’s stock fell by 4.5% in early European trade as the company missed sales forecasts but maintained its full-year outlook. The company reported net sales of 5.29 billion euros and a net profit of 1.22 billion euros, falling short of expectations. Net sales decreased by 21.6% year-on-year, while net income dropped by 37.4%. Despite the decline, ASML’s net sales were within the middle point of the company’s guidance. Net bookings for ASML’s machinery also decreased, totaling 3.6 billion euros in the first quarter, down by 4% year-on-year and nearly two thirds versus the previous quarter.
ASML is a significant player in the semiconductor industry, specializing in extreme ultraviolet lithography machines essential for producing advanced chips globally. Weak demand for consumer electronics like smartphones and laptops last year affected chipmakers that supply semiconductors for these devices, resulting in decreased demand for ASML’s equipment. However, semiconductor companies like Samsung are experiencing a rebound in demand. Despite these challenges, ASML has reaffirmed its projection for 2024 net sales to be similar to 2023 and expects the second half of the year to be stronger as the industry continues to recover.
The company’s equipment is used by major chip manufacturers such as TSMC, Samsung, and Intel. ASML is optimistic about the future, particularly as Samsung, TSMC, and Intel are increasing production capacity in the U.S. with support from the U.S. CHIPS and Science Act. ASML’s CFO, Roger Dassen, believes that by 2025, these factors will converge, leading to new fab openings, strong secular trends, and the industry reaching an upturn. ASML has not yet addressed any potential impact from export restrictions imposed on sales to China. The Dutch government introduced curbs on the export of advanced semiconductor equipment, including ASML’s machinery, last year following pressure from the U.S.
Despite export restrictions, ASML revealed that sales of its systems to China accounted for 49% of the total in the first quarter, up from 39% in the previous quarter. The company had previously estimated that export restrictions would impact 10% to 15% of sales to China in 2024. ASML remains optimistic about the future, characterizing 2024 as a transition year with continued investments in capacity ramp and technology to prepare for the industry’s recovery. The company’s CEO, Peter Wennink, expects the industry to rebound from the downturn, with the second half of 2024 predicted to be stronger than the first half. ASML’s long-standing partnerships with major chip manufacturers and its crucial role in advancing semiconductor technology position it well for future growth despite current challenges in the industry.
