Dutch firm ASML is a leading manufacturer of machinery used in the production of advanced chips. Recent chip restrictions have caused uncertainty among companies like ASML, as they try to understand how the rules will affect their operations.
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ASML, a chip equipment firm, reported a profit increase in the third quarter and exceeded analyst expectations. However, the company predicts that its revenue may remain flat in 2024.
ASML is a key player in the semiconductor industry, manufacturing extreme ultraviolet lithography machines essential for the production of advanced chips globally.
Despite the profit rise, ASML shares dropped nearly 4% after 8 a.m. London time due to rising geopolitical concerns.
Here’s a comparison of ASML’s third-quarter performance against LSEG estimates:
- Net sales: €6.67 billion ($7.1 billion) vs. expected €6.71 billion
- Net profit: €1.89 billion vs. expected €1.8 billion
Net sales increased by 15.5% compared to the same period last year, while net profit rose approximately 11%.
However, both figures for the third quarter were lower than the second-quarter results.
“The semiconductor industry is currently going through a downturn, but our customers anticipate a turning point by the end of this year,” said ASML CEO Peter Wennink in a statement. “We predict that 2024 will be a transitional year.”
Wennink added that the company is taking a more conservative outlook for 2024 and expects revenue to be similar to 2023. However, ASML also sees 2024 as a crucial year for preparing for significant growth in 2025.
The semiconductor market has faced challenges this year due to weak demand for products like smartphones and laptops, which rely on these components. Major chip manufacturers and ASML customers, TSMC and Samsung, have reduced their capital expenditure as a result.
In the third quarter, ASML’s net bookings suffered a 42% decline from the previous quarter as customers cut back on spending.
Nevertheless, ASML has reaffirmed its guidance of a 30% increase in net sales for 2023.
U.S. chip curbs in focus
ASML has also been affected by the tensions between the U.S. and China in the technology sector, given the significance of its tools.
In June, the Netherlands, where ASML is headquartered, implemented its own export restrictions on advanced semiconductor equipment, requiring companies to obtain a government license for certain technologies.
This move came after the U.S. introduced its own comprehensive technology export restrictions to China and encouraged its allies to follow suit.
ASML maintains that these measures are unlikely to impact its financial results for 2023.
Recently, the U.S. Department of Commerce announced further restrictions to prevent the sale of artificial intelligence chips to China, aiming to close the loopholes that emerged after last year’s restrictions.
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