- ASML reported lower third-quarter earnings, but beat estimates as it expected 2024 revenue to be flat.
- ASML is one of the world’s most important semiconductor companies, producing the machinery needed to manufacture the world’s most advanced chips.
- The Dutch company is also caught up in tensions over technology between the US and China because of how important its tools are.
Dutch company ASML manufactures one of the most important machines needed to manufacture the most advanced chips in the world. Restrictions on chips in the US have left companies, including ASML, scrambling to figure out what the rules mean in practice.
Emmanuel Dunand | AFP | Getty Images
Chip equipment company ASML reported a year-over-year profit increase in the third quarter and beat analyst estimates, but its 2024 revenue outlook will be flat.
ASML is one of the world’s most important semiconductor companies, producing tools known as extreme ultraviolet lithography machines, needed to manufacture the world’s most advanced chips.
ASML shares fell nearly 4% after 8 a.m. London time, as rising geopolitical concerns offset higher earnings.
Here’s how ASML performed in the third quarter versus LSEG estimates:
- Net sales: 6.67 billion euros ($7.1 billion) versus 6.71 billion euros expected
- Net profit: 1.89 billion euros versus 1.8 billion euros expected
Net sales increased by 15.5% from the €5.78 billion reported in the same period of the previous year. Net profit jumped by about 11% from the 1.7 billion euros recorded in the same period of the previous year.
The third quarter numbers represent a decline from the second quarter results.
“The semiconductor industry is currently working through the bottom of the cycle, and our customers expect the inflection point to be visible by the end of this year,” ASML CEO Peter Wennink said in a statement on Wednesday. “So we expect 2024 to be a transitional year.”
Wennink added that the company is taking a “more conservative view” for 2024 and expects a similar revenue number for 2023.
“But we also view 2024 as an important year to prepare for the significant growth we expect for 2025.”
The semiconductor market has had a difficult year amid weak demand for products such as smartphones and laptops, which contain these components. As a result, companies such as Taiwan’s TSMC and Samsung, two of the world’s largest chip manufacturers and ASML customers, have cut their capital expenditures this year.
However, ASML reiterated its guidance to increase net sales by 30% year-on-year for 2023.
The Dutch company has also been caught in the midst of tensions over technology between the United States and China due to the importance of its tools.
In June, the Netherlands – where ASML is headquartered – imposed its own export restrictions on advanced semiconductor equipment, with companies now requiring a government license to take certain technologies abroad.
This came after the United States imposed its sweeping restrictions on technology exports to China, and Washington urged allies to follow suit.
ASML stressed that these measures are unlikely to affect its 2023 financial results.
On Tuesday, the US Department of Commerce announced the imposition of more restrictions to prevent the sale of artificial intelligence chips to China. Washington said that the aim of this is to fill the loopholes that appeared after the restrictions imposed last year.
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