Europe’s largest tech company, ASML Holding, has continued to make strides in the semiconductor industry, maintaining a conservative outlook for 2024 despite recent positive developments. In the final quarter of 2023, ASML received an impressive €9.2 billion worth of orders, signaling a promising recovery for the industry.
ASML, based in the Netherlands, is renowned for its cutting-edge machines used in microchip manufacturing. The company witnessed a remarkable increase in orders from €6.3 billion in the same quarter the previous year to €2.6 billion in the third quarter. Notably, it secured €5.2 billion in orders for its state-of-the-art extreme ultraviolet (EUV) lithography systems.
Shares of ASML, listed on the Dutch stock exchange, surged by 7% on Wednesday, bolstering a remarkable 22% increase over the past year.
Throughout the fourth quarter, ASML generated an impressive €7.2 billion in sales, with customers worldwide purchasing 113 of their multi-million-euro machines at an impressive margin of 51.4%. Consequently, the company recorded a net income of €2 billion.
ASML's outstanding performance surpassed analysts' expectations, as they had predicted €1.87 billion in profits from €6.9 billion in sales. Company watchers polled by Visible Alpha anticipated ASML to ship out 111 of their lithography systems.
Despite the positive outlook for the semiconductor industry and these exceptional results, ASML remains cautiously optimistic for the future. The company expects sales to remain consistent in 2024, similar to the levels observed in 2023. This conservative approach aligns with the company's commitment to navigate the recovery from the widespread microchip sales decline experienced since the second half of 2022.
The Semiconductor Industry Sees Positive Signs Amidst Market Uncertainty
ASML, the leading semiconductor lithography systems maker, is cautiously optimistic about the recovery of the semiconductor market this year. While the shape of the recovery is still uncertain, there are positive signals that suggest a potential upturn. ASML CEO, Peter Wennink, emphasized the company's strong order intake in the fourth quarter, which serves as a clear indication of future demand.
Looking ahead, ASML is preparing for substantial growth by 2025, with 2024 acting as a transitional year. JPMorgan analysts, led by Sandeep Deshpande, recognize ASML's advantageous position in capitalizing on the global trend towards EUV lithography systems. As the sole manufacturer of these cutting-edge manufacturing machines, ASML is well-positioned to benefit from this shift.
However, Wennink acknowledged that newly-imposed restrictions on exporting high-tech lithography systems to China will impact around 10%-15% of sales to the country. These export rules, initiated by the Dutch government in collaboration with the United States, aim to prevent China from acquiring advanced machines essential for artificial intelligence development.
China currently represents ASML's largest customer, accounting for 39% of all sales in the fourth quarter of 2023. In comparison, South Korea, Taiwan, and the U.S. hold smaller shares at 25%, 13%, and 11% respectively.
With signs of a potential recovery in the semiconductor industry and ASML's strong market position, the company remains optimistic about the future, despite the uncertainties lying ahead.
