ASML Holding NV forecast better-than-expected first-quarter sales due to strong demand for its advanced chip-making machines, even as export controls threaten growth.
(Bloomberg) — ASML Holding NV forecast better-than-expected first-quarter sales due to strong demand for its advanced chip-making machines, even as export controls threaten growth.
Europe’s largest semiconductor equipment producer on Wednesday projected sales of €6.1 billion to €6.5 billion ($6.7 billion to $7.1 billion) this quarter, beating the average analyst estimate of €6.07 billion.
ASML shares fell 1% to €609.8 at 10:10 a.m. in Amsterdam on Wednesday, trimming a recent rally.
The chip sector has been roiled by the US’s bid to curb exports of leading-edge technology to China, threatening overall demand. Japan and the Netherlands are poised to agree on new controls on exports of chipmaking equipment to China, Bloomberg News reported. ASML has said that demand elsewhere in the world for its most advanced products can make up for any revenue shortfall from China.
“We’re businesspeople. We’re not politicians,” Chief Executive Officer Peter Wennink said in a transcript with the release. “We just have to wait for the governments and the politicians to keep talking and come to a reasonable solution.”
He added the company expects its sales to grow more than 25% in 2023 and gross margin to improve from the year before.
“Our customers indicate that they expect the market to rebound in the second half of the year,” Wennink said. “Considering our order lead times and the strategic nature of lithography investments, demand for our systems therefore remains strong.”
In terms of possible new government restrictions on the sales of its chip-making machines, Wennink said his company has “given up enough” with the pre-existing restrictions on the sales of its extreme ultraviolet lithography machines to China.
The Dutch chip-gear maker’s sales were €6.4 billion, in line with analyst estimates, in the three months ended December. Net income was €1.8 billion, edging out analyst estimate of €1.68 billion. The company continued to delay recognition for some deals in order to speed up delivery.
ASML said in November that it targets sales of as much as €40 billion by 2025 and as much as €60 billion by 2030. The company is one of the very few producers of the sophisticated lithography machines needed to make mid-grade semiconductors, and the manufacturer of an one-of-a-kind piece of equipment needed to make the most cutting-edge chips.
“There could be some concerns on gross margins but we expect the revenue beat to outweigh,” Barclays analyst Simon Coles said in a note to clients.
Jefferies analyst Janardan Menon said in a separate note that “we expect ASML’s strong growth rates and margin improvement to continue into 2024 and beyond.”
Key Insights
- ASML reported net sales of €21.2 billion last year with a gross margin of 50.5%
- The company shipped a total of new 317 lithography machines in 2022, up from 286 units in 2021
Market Context
- ASML shares rose 22% since the start of the year as of the close of trading on Tuesday
Get More
- ASML Falls as Profit Outlook Dims Strong Sales: Street Wrap
–With assistance from Henry Ren.
(Updates with shares in 3rd paragraph, analysts comments from penultimate.)
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