Chip machine manufacturer ASML expects turnover to be 30 percent higher this year than last year. The expected revenue growth therefore exceeds the previously shared forecast of 25 percent. The company from Veldhoven has this on Wednesday announced with the publication of the quarterly figures. However, CEO Peter Wennink sees “cautious” customers who, due to macroeconomic uncertainties such as increased inflation and interest rate decisions, expect that the chip sector will need longer than expected to recover from its dip. The demand for chip machines is therefore slowly recovering.
The turnover of the company from Veldhoven amounted to 6.9 billion euros between April and June, almost 0.2 billion euros more than in the first quarter. This is higher than expected and is mainly due to increased sales of relatively older ultraviolet equipment (DUV), which can make less sophisticated chips than with the more modern extreme ultraviolet systems (EUV). The profit margin increased by 0.7 percentage point to 51.3 percent.
ASML sold fewer EUV devices in the past quarter. This has to do with shifts in the time when customers want the machines, says Wennink in a video interview on the ASML site. “A number of our customers’ factories are not quite ready yet. Then they have to have the machines a little later.”
Loss of Chinese market
The later completion of factories elsewhere in the world means that the share of China in ASML’s total turnover rose sharply in the past quarter: from 10 percent last year to 24 percent now. Due to the postponement, Chinese buyers were placed higher on the waiting list for orders. “Their factories are ready. They can use the machines. So when they are available, they will take them,” says Wennink.
The fact that Chinese companies will soon have to deal with export restrictions from the Dutch government, which were announced this spring, also plays a role in this. ASML was no longer allowed to export EUV machines to China, but from September this will be expanded with part of the older DUV equipment. The Netherlands is restricting the export of the chip machines, because the systems can also be used to develop modern military electronics. Chinese companies will therefore want to import as many DUV devices as possible before the export restrictions come into effect.
ASML does not expect that the partial disappearance of the Chinese market will lead to lower turnover in the short term. For the third quarter, the chip manufacturer is again aiming for a turnover of between 6.5 and 7 billion euros, despite the economic dip in the chip industry. In the past quarter, customers ordered 4.5 billion euros worth of new machines, although 0.8 billion euros higher than in the first quarter, but last year ASML received orders worth 8 billion euros in the same period last year. This amount is largely added to the turnover in the quarter in which the machines are delivered. The Veldhoven-based company can move forward mainly due to the long list of orders already placed for a value of 38 billion euros.
Additional staff
ASML is still looking for extra staff, although the chip manufacturer stated last week that it would grow less fast this year than the approximately ten thousand extra employees last year. On Tuesday it was announced that ASML is taking over about a hundred Philips employees. These are technicians from the Philips Engineering Solutions department, who were already working for ASML on the smallest measurement and control components of the chip machines – so-called ‘mechatronics’. Philips is letting the group go as part of a large-scale reorganization operation in the R&D (Research & Development) branch, a necessary cutback by the Eindhoven company against the background of the lingering affair with apnea devices.
After the announcement of the quarterly figures, ASML initially recorded a slight plus on the Amsterdam stock exchange, but it dropped later in the day. This happened during the presentation of top executives Wennink and Roger Dassen to investors and stock market analysts, in which the duo had not yet made any statements about the expected turnover for 2024. When the stock market closed, the share had lost about 2.1 percent.