By Toby Sterling and Nathan Vifflin
AMSTERDAM (Reuters) -ASML, the largest supplier of equipment to computer chip makers, reported weaker than expected first-quarter new bookings on Wednesday, although sales to China held up despite U.S.-led restrictions.
Shares in Europe’s biggest tech firm, which had risen 34% this year, were down 4.5% to 873.40 euros at 0741 GMT
The Dutch group is seeing a lull in demand for its most advanced machines, but gearing up for strong growth in 2025 due to strong demand for AI and memory chips, including from TSMC of Taiwan, which makes chips for Nvidia and Apple.
For 2024, ASML kept its financial forecasts unchanged, with sales seen flat from 2023’s 27.6 billion euros ($29.3 billion).
ASML dominates the market for lithography systems, machines that can cost hundreds millions of euros each and use light beams to help create microscopic circuitry. It is set to benefit from new chip plants planned with support from governments in Taiwan, South Korea, Japan, China and the United States.
New bookings in the first quarter were 3.6 billion euros, well below the 5.4 billion seen by analysts polled by Reuters.
“Although disappointing we would not read too much into it as order intake is notoriously lumpy,” said ING analyst Marc Hesselink.
Sales of ASML’s lithography systems to customers in China made up a record 49% of the total in the first quarter, or around 2 billion euros, the company said in an investor presentation published alongside the earnings.
In recent years, China has been ASML’s third market after Taiwan and South Korea, and ahead of the United States.
CHINA RESTRICTIONS
The U.S. government has been seeking to undermine China’s ability to make its own advanced chips as a potential military threat by restricting exports of advanced chipmaking equipment. China, meanwhile, is pursuing a multi-year programme to reduce its dependence on imported chips.
The result has been that Chinese chipmakers are flocking to buy older ASML equipment that does not face export restrictions, needed to make chips that go into products from refrigerators and automobiles to toys and smartphones.
According industry group SEMI, China is adding the most chipmaking capacity in 2024, followed by Taiwan and South Korea.
Outgoing ASML CEO said that, despite the weak bookings, the company still expected a stronger “second half of the year … in line with the industry’s continued recovery”, describing 2024 overall as a “transition year”.
Wennink, who is retiring, will be replaced by Christophe Fouquet at the company’s annual meeting on April 24.
Han Dieperink, chief investment officer at investment firm Aureus, said he was not worried by the quarterly numbers, given ASML’s strong long-term growth outlook.
He said the company would benefit from growing demand for AI chip capacity and a related recovery in the memory chip market.
“You can’t get around ASML. And that gives us also some sort of defensive qualities,” he said. Aureus has 5-6% of its 2 billion euro equity portfolio in ASML.
ASML’s first-quarter net income was 1.22 billion euros, down from 2.05 billion in the fourth quarter of 2023. Sales were 5.29 billion euros, down from 7.24 billion euros.
($1 = 0.9414 euros)
(Reporting by Toby Sterling; Editing by Sonali Paul and Mark Potter)
