By ASML, the Dutch semiconductor equipment maker, reported robust second-quarter earnings on July 19, surpassing analysts’ expectations and demonstrating impressive growth in both sales and net profit. The company’s CEO, Peter Wennink, announced a significant boost to ASML’s full-year sales growth forecast, raising it from 25% to an impressive 30%. This upward revision is attributed to the continued strong demand from Chinese customers, who face restrictions on purchasing the latest equipment due to export control regulations.
Despite facing some macro-economic uncertainties, ASML’s diverse customer base across various market segments has contributed to a strong order backlog of approximately 38 billion euros ($42.6 billion). This substantial backlog provides the company with a solid foundation to navigate through short-term uncertainties effectively.
In the second quarter, ASML achieved a net profit of 1.9 billion euros, representing a remarkable 35% increase compared to the same period last year. Sales also surged by 28% to reach 6.9 billion euros, outperforming analysts’ projections of 1.82 billion euros and 6.74 billion euros for net profit and sales, respectively.
ASML’s dominance in the market for lithography systems is evident, as it supplies machines costing up to $200 million each, which are crucial for creating the intricate circuitry of computer chips. The company is a key supplier to virtually every major chip maker worldwide. Due to overwhelming customer demand, ASML is expanding its production capacity, striving to meet the market’s insatiable appetite for advanced chip manufacturing technology.
However, despite the high demand, there is a nuanced situation with regard to the pace of equipment delivery. While chip makers using ASML’s cutting-edge EUV (extreme ultraviolet) systems are slowing their equipment orders, those utilizing the slightly older DUV (deep ultraviolet) product line are still eager for additional tools.
Part of the reason for the slowdown in EUV orders from leading chip manufacturers, such as TSMC, Samsung, and Intel, is the unpreparedness of their new fabrication plants to receive EUV machines. Consequently, ASML’s Chinese customers have been more than willing to fill this gap, expressing their contentment in acquiring equipment that other customers may not require at the moment.
It is worth noting that ASML has not sold EUV machines in China due to export control restrictions, but the Chinese market remains pivotal to the company’s operations. The situation in the geopolitical landscape has been complex, with the Dutch government introducing licensing requirements for certain DUV models in response to pressure from the U.S., aimed at curbing Beijing’s ability to manufacture advanced chips.
Despite these geopolitical challenges, Wennink remains optimistic about ASML’s future financial performance. He firmly believes that the Dutch rules and any potential further regulations from the U.S. will not have a substantial impact on the company’s financial forecasts for 2023 and beyond.
In conclusion, ASML’s exceptional second-quarter results and the positive outlook for the full year underscore the company’s strong position in the semiconductor equipment market. The continued demand from Chinese customers and the company’s prudent management of uncertainties provide a promising path forward for ASML’s growth and success in the coming years.
