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ASML Holding NV (NASDAQ: ASML), one of the world’s leading semiconductor firms has reported a significant year-on-year rise in profit for the third quarter of 2023, exceeding analyst expectations. However, the company forecasts that its revenue in 2024 will remain flat.
This comes as the semiconductor industry experiences a period of uncertainty, with ASML CEO Peter Wennink acknowledging the ongoing challenges faced by the market in a recent report.
In the third quarter of 2023, ASML reported net sales of 6.67 billion euros, slightly lower than the 6.71 billion Euros expected by analysts. Despite this, net sales saw a notable 15.5% increase from the 5.78 billion Euros reported during the same period the previous year.
Net profit for the same quarter reached 1.89 billion Euros, surpassing the anticipated 1.8 billion Euros. This represented an 11% growth in net profit compared to the third quarter of 2022. It’s important to note that ASML’s third-quarter figures reflected a decline from its second-quarter results.
The company, which plays a crucial role in the semiconductor industry, is known for its role in manufacturing the tools required to create the most advanced chips in the world. According to Wennink, “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 is taking a conservative view of 2024, with revenue projections similar to 2023. Wennink mentioned, “But we also look at 2024 as an important year to prepare for significant growth that we expect for 2025.”
The conservative projection has riled investors as the firm’s shares plunged by 2.73% in the pre-market to $591.70
The semiconductor market has faced a challenging year, with weakened demand for products like smartphones and laptops, which are major consumers of semiconductor components.
Prominent chip manufacturers like Taiwan’s TSMC Ltd (TPE: 2330) and South Korea’s Samsung Electronics Co Ltd (KRX: 005930), both key customers of ASML, have scaled back their capital expenditure in response to the market challenges. ASML, headquartered in the Netherlands, has also been embroiled in the geopolitical tensions over technology between the U.S. and China due to the critical nature of its tools.
The Netherlands implemented export restrictions on advanced semiconductor equipment, requiring companies to obtain government licenses to take specific technologies abroad. This move came in response to the US’s own extensive restrictions on technology exports to China and its calls for allies to follow suit.
ASML has, however, reassured stakeholders that these measures are unlikely to impact its 2023 financial results. The company maintains its guidance for net sales to increase by 30% year-on-year for 2023.
Despite the challenges of the current semiconductor market, ASML continues to lead the industry in providing essential technology for chip manufacturing, positioning itself for a future period of significant growth.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
Despite the great ASML Q1 2023 earnings, sales of chips to China slowed down within that time period as geopolitical tension between China and the United States took a new twist.
Netherlands-based chipmaker ASML Holding NV (NASDAQ: ASML) has projected its sales and earnings to the Chinese mainland will skyrocket for the rest of 2023 after it recorded a significant slowdown in its business in the region in the first quarter (Q1 2023). The projections came after the company reported a better-than-expected first-quarter result in which its net profit came in at 1.96 billion euros ($2.15 billion).
As a sign that the company’s business thrived in the first quarter of the year, the Veldhoven-based chipmaker’s net profit topped the current figure from the more than 695 million euros it raked in this period last year, a 3x growth. The ASML revenue for the quarter topped 6.74 billion euros, up by 91% from the year-ago period.
Judging the performances of companies is often better when profiled alongside expectations from analysts. In the case of ASML, Refinitiv analysts were expecting revenue of 6.31 billion euros and a net profit of 1.62 billion euros. The company surpassed expectations on both fronts at a time when most chipmakers are unsure of their survival owing to slowing demand.
“We continue to see mixed signals on demand from the different end-market segments as the industry works to bring inventory to more healthy levels. Some major customers are making further adjustments to demand timing while we also see other customers absorbing this demand change, particularly in DUV at more mature nodes,” said ASML President and Chief Executive Officer Peter Wennink.
Despite the mixed demand signals, Wennink said the company currently has more orders than it can currently meet demands for at this time. In his statement, he reiterated the commitment to prioritize the focus on maximizing system output.
Despite the great ASML Q1 2023 earnings, sales of chips to China slowed down within that time period as geopolitical tension between China and the United States took a new twist. The US is keen on crushing the military capabilities of China but stiffening the supply of high-end chips to the country.
As ASML is one of the core suppliers to China, its orders have been somewhat impacted but the company said it is going to leverage the demand from domestic China which accounts for 20% of its sales. By capitalizing on this market segment, ASML expects to print a significant momentum for the rest of the year.
With its current investment in Research and Development (R&D), ASML’s Wennink pointed our how bullish the company is with respect to its proposed performance moving forward.
“We expect second-quarter net sales between €6.5 billion and €7.0 billion with a gross margin between 50% and 51%. ASML expects R&D costs of around €990 million and SG&A costs of around €275 million For 2023, ASML expects continued strong growth with a net sales increase of over 25% and a slight improvement in gross margin, relative to 2022,” he said.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Leading European tech company ASML has given higher guidance for its 2023 outing following a sound Q4 2022 earnings report.
Advanced Semiconductor Materials Lithography (ASML) recently posted its Q4 2022 financial report, which beat the earnings forecast for the period. Europe’s largest technology company raked in 6.43 billion euros for the period that ended December 31st. Meanwhile, analysts were expecting a revenue haul of 6.38 billion euros for the fourth quarter of last year.
ASML also reported a Q4 2022 net profit of 1.82 billion euros compared to the consensus estimate of 1.70 billion euros. In addition, the Dutch multinational tech corporation also saw a record-high order backlog of 40 billion euros.
ASML’s latest quarterly growth came amid the macroeconomic constraints that plagued the tech sector throughout last year. During the Q4 2022 period, the company realized quarterly net sales of 21.2 billion euros and a gross margin of 50.5%. ASML also raked in a net income of 5.6 billion euros and now projects a 25% growth in 2023 net sales. The tech giant remains optimistic about said net sales growth despite likely new curbs on its exports to China.
ASML President and Chief Executive Officer Peter Wennink commented on the company’s Q4 results, saying:
“For ASML, 2022 was another strong year ending with total net sales for the year of €21.2 billion, gross margin of 50.5%, and a record backlog at the end of 2022 of €40.4 billion.”
Furthermore, Wennink also added:
“We continue to see uncertainty in the market caused by inflation, rising interest rates, risk of recession, and geopolitical developments related to export controls. However, our customers indicate that they expect the market to rebound in the second half of the year. Considering our order lead times and the strategic nature of lithography investments, demand for our systems therefore remains strong.”
On ASML’s loftier projections for 2023, Wennink stated that the company expects continued strong growth with an over 25% net sales increase. In addition, the Veldhoven-based firm anticipates a marginal gross margin improvement compared to 2022.
ASML previously struggled to meet demand as its top clients Samsung, TSMC, and Intel (NASDAQ: INTC), are all in varying expansive stages.
Wennink explained that despite economic uncertainties weighing heavy on ASML’s 2023 economic outlook, there is a silver lining. According to the CEO, conditions improved towards the end of last year, and China seems to be on the mend now. In conclusion, Wennink opines that demand remains higher than ASML’s production capacity.
ASML had sales in China worth 2.16 billion euros last year, which accounted for 14% of its total revenue. The Chinese market represented the company’s third-largest market behind Taiwan and South Korea.
According to Wennink, ASML’s exports to China have remained unaffected by the US imposition of new restrictions on its own companies. In Wennink’s opinion, the play out of the continuous dialogue between both governments would come to “a reasonable solution” on restrictions.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
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