ASML Orders Miss Forecasts as Chip Makers Await Recovery in Demand — 3rd Update – Morningstar
By Mauro Orru
ASML Holding posted orders below analysts’ expectations for the first quarter as chip makers wait for demand to recover before securing key production equipment for the coming years.
The Dutch company, which provides semiconductor-making machinery to chip makers, said orders slipped to 3.61 billion euros ($3.83 billion) in the three months to the end of March from EUR3.75 billion a year earlier. Analysts had forecast orders of nearly EUR5.10 billion, according to consensus estimates by Visible Alpha.
ASML’s lackluster orders show that its customers, major chip makers like Taiwan Semiconductor Manufacturing Co., Intel and Samsung Electronics, are for now shying away from buying up hardware for semiconductor production in anticipation of better demand.
TSMC, the world’s largest contract chip maker, reported a rare 8.7% contraction in revenue last year. Chip makers have been grappling with an inventory glut in recent months as manufacturers of smartphones, computers and other personal-electronic devices held off ordering more chips that they had stockpiled in recent years.
Now, those companies are digesting their inventories and chip makers are seeing the first signs that demand for semiconductors is set to recover. TSMC expects revenue this year to grow more than 20%.
Meanwhile, the Biden administration is handing out billions of dollars in subsidies to companies, such as TSMC, Intel and Samsung, willing to invest in chip-making facilities in the U.S. in a move aimed at reviving hardware manufacturing in the country.
ASML shares slumped 6% at market open in Amsterdam after the lower-than-expected orders. However, shares have been on the rise in recent months, amid expectations that the company would benefit from a recovering semiconductor market. The stock is up about 27% since the year began at about EUR866.00. A year ago, shares traded at roughly EUR580.00.
Chief Executive Peter Wennink said 2024 would be a transition year, expecting a stronger second half in line with the industry’s recovery. This year, ASML is expecting sales to be similar to the EUR27.56 billion that it reported for 2023.
However, sales in the first quarter fell to EUR5.29 billion from EUR6.75 billion, missing analysts’ forecasts. For the current quarter, the group expects sales between EUR5.7 billion and EUR6.2 billion.
Net profit declined to EUR1.22 billion from nearly EUR1.96 billion, but it still exceeded analysts’ EUR1.09 billion forecast.
Gross profit–a closely watched metric for companies operating in the semiconductor industry–came in at EUR2.70 billion, generating a 51% margin that beat consensus and company guidance. For the current quarter, ASML is forecasting a gross margin between 50% and 51%.
ASML expects to grow strongly in the longer term, forecasting sales of up to EUR40 billion next year and up to EUR60 billion at the end of the decade.
Write to Mauro Orru at [email protected]
(END) Dow Jones Newswires
April 17, 2024 04:01 ET (08:01 GMT)
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