Written by Toby Sterling and Nathan Vifflin
AMSTERDAM (Reuters) – ASML, the largest supplier of equipment to computer chip makers, said on Wednesday new orders in the first quarter were lower than expected, although sales to China were strong despite U.S.-led restrictions. reported.
Shares in Europe's biggest tech company have risen 34% since the start of the year, but were down 4.5% at 873.40 euros at 0741 GMT.
The Dutch group sees a lull in demand for cutting-edge machines, but strong demand for AI and memory chips from companies such as Nvidia and Taiwan's TSMC, which makes chips for Apple, will lead to a strong year in 2025. We are preparing for growth.
ASML has kept its 2024 forecast unchanged, expecting sales to remain flat from 27.6 billion euros ($29.3 billion) in 2023.
ASML dominates the market for lithography systems. Lithography systems are machines that cost hundreds of millions of euros each and use beams of light to create microscopic circuits. It is expected to benefit from new chip factories planned with support from governments in Taiwan, South Korea, Japan, China and the United States.
New bookings totaled 3.6 billion euros in the first quarter, well below the 5.4 billion euros expected by analysts polled by Reuters.
“It's disappointing, but orders are notoriously volatile, so I wouldn't read too much into this,'' said Mark Hesselink, an analyst at ING.
ASML's sales of lithography systems to Chinese customers accounted for a record 49% of total sales in the first quarter, or about 2 billion euros, the company said in an investor presentation accompanying its results.
In recent years, China has become ASML's third largest market after Taiwan and South Korea, and ahead of the United States.
china restrictions
The U.S. government is seeking to undermine China's advanced chip manufacturing capabilities by restricting exports of advanced chip manufacturing equipment as a potential military threat. Meanwhile, China is moving ahead with a multi-year plan to reduce its dependence on imported chips.
As a result, Chinese chipmakers are rushing to buy older, non-export-controlled ASML equipment needed to make chips used in products ranging from refrigerators and cars to toys and smartphones.
According to industry group SEMI, China will add the most semiconductor manufacturing capacity in 2024, followed by Taiwan and South Korea.
The outgoing ASML CEO said that despite the weak order book, the company still expects a strong second half of the year “in line with the continued recovery of the industry” and said that it plans to spend the entirety of 2024 on a “transition… “year of the year.''
Mr. Wennink will be replaced by Mr. Christophe Fouquet at the annual general meeting on April 24th.
Han Diepelink, chief investment officer at investment firm Aureus, said he was not worried about the quarterly numbers given ASML's strong long-term growth outlook.
He said the company will benefit from rising demand for AI chip capacity and a related recovery in the memory chip market.
“You can't get around ASML, and it also gives us some kind of defensive qualities,” he said. Aureus holds 5-6% of its €2 billion equity portfolio in ASML.
ASML's first quarter net income was 1.22 billion euros, down from 2.05 billion euros in the fourth quarter of 2023. Sales were 5.29 billion euros, down from 7.24 billion euros.
(1 dollar = 0.9414 euro)
(Reporting by Toby Stirling; Editing by Sonali Paul and Mark Potter)
