ASML Orders Fall as Chipmakers Hold Off High-End Gear Purchases

(Source: Bloomberg) The Dutch company ASML Holding NV reported lower-than-expected orders, as South Korean and Taiwanese chipmakers refrained from purchasing its most sophisticated equipment.

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The first quarter saw a 61% decline in bookings at Europe’s most valuable technology company from the previous three months, to €3.6 billion ($3.8 billion), falling short of projections of €4.63 billion.

Leading chip companies, including as Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., are delaying new orders until their manufacturing clients clear out hardware stockpiles used in computers, smartphones, and automobiles. ASML, which likewise predicted sales this quarter below analyst projections, is suffering as a result.

ASML’s stock dropped 4.1% to €875.70 at 2:42 PM on Wednesday in Amsterdam.

The world’s only manufacturer of the high-end extreme UV machines required to generate the most sophisticated semiconductors, ASML, had the largest decline in demand. Orders for them fell from €5.6 billion in the prior quarter to €656 million during that time.

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According to Oddo BHF analyst Stephane Houri, the number of EUV orders is “extremely low,” suggesting that significant ASML clients like TSMC, Samsung, and Intel Corp. did not expand their investments in the high-end equipment.

Timm Schulze-Melander, an analyst at Redburn Atlantic, stated that investors had anticipated TSMC to book sizeable EUV tools in the first quarter. Earnings and revenue for the following year are “vulnerable” because to the disappointing orders, he warned.

Chief Executive Officer Peter Wennink stated in a statement on Wednesday, “Our outlook for the full year 2024 is unchanged, with the second half of the year expected to be stronger than the first half, in line with the industry’s continued recovery from the downturn.” “2024 is a year of transition in our eyes.”

In an effort to secure domestic supplies, nations ranging from the US to Germany have provided tens of billions of dollars in subsidies to chipmakers so they may construct new wafer fabrication facilities, or fabs. This year, South Korea revealed plans to build a $470 billion hub for the production of chips. Many of these projects are not yet in development, but they should increase demand for ASML equipment.

Before demand comes up, ASML anticipates revenues in the current quarter to be between €5.7 billion and €6.2 billion, missing predictions of €6.5 billion.

According to a statement from the chief financial officer, Roger Dassen, “I think it’s pretty clear that the industry is in its upturn.” “The industry will rebound in 2024, and we are preparing for a stronger year in 2025.”

The company’s China business held up fairly well, despite weakness being seen in Taiwan, South Korea, and the US. Chipmakers there continue to purchase less advanced equipment in an effort to capture the established chip industry.

Sales in China dropped from €2.2 billion to €1.9 billion during the first quarter. The ability of the Veldhoven-based company to sell cutting-edge equipment to China has been challenged by Dutch and US export regulations intended to impede Beijing’s chip ambitions.

Last year, ASML profited from a surge in demand from China, as chipmakers there raced to acquire cutting-edge lithography equipment. The new restrictions, which became fully effective on January 1, prevent ASML from exporting its second-most capable category of machinery—immersion DUV lithography machines—to China.

Despite US government pressure, ASML has never been able to sell its EUV machines to China. The company estimates that the new export restriction procedures will have an impact on up to 15% of China sales this year.

For certain clients of ASML, there might be indications of hope in the future. TSMC said earlier this month that revenue increased at the quickest rate in over a year from January to March.

When Wennink leaves later this month, ASML’s chief business officer, Christophe Fouquet, will assume the role of chief executive officer. He will need to strike a compromise between appeasing growth-oriented shareholders and the geopolitical pressure coming from the US. Under Wennink, shares increased by around 1,400% in ten years.

–With Henry Ren’s aid.

(Updates with a sixth-paragraph expert commentary.)

Capital Times

ASML Orders Fall as Chipmakers Hold Off High-End Gear Purchases

ASML Orders Fall as Chipmakers Hold Off High-End Gear Purchases

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