ASML beats estimates but sees some chipmaker caution

In spite of some customer caution, ASML Holding NV (ASML.AS) surpassed first-quarter earnings projections on Wednesday because to persistently high demand for its chip manufacturing equipment.

The comments from the largest tech company in Europe come after reports that memory chip manufacturers SK Hynix (000660.KS) and Micron (MU.O) have slashed expenditure plans and that Samsung (005930.KS) will reduce production due to a decline in semiconductor demand.

With revenue climbing 91% to 6.74 billion euros, ASML reported a threefold increase in net profit to 1.96 billion euros ($2.15 billion). According to data from Refinitiv, analysts had predicted a net profit of 1.62 billion euros on sales of 6.31 billion euros.

The Netherlands supported a US campaign to limit supplies to Beijing that potentially have “dual use” military implications, therefore the Dutch corporation is now compelled to restrict exports of specific technology to China starting this summer.

Sales to China fell in the first quarter, but ASML predicted they would pick up through the remainder of 2023. It also said its prognosis remained positive despite client budget cuts.

“Overall demand still exceeds our capacity for this year, and we currently have (order) backlog of over 38.9 billion euros,” CEO Peter Wennink stated in a statement.

Because it controls the market for lithography tools used to produce the intricate circuitry of chips, ASML plays a significant role in the semiconductor industry.

As customers like TSMC (2330.TW), Samsung, and Intel (INTC.O) spend billions on growth, it has struggled to keep up with demand.

JPMorgan stated in a report that “in our view, neither 2023 or 2024 estimates at the company are at risk.”

At 8:00 GMT, ASML shares were down 2.5% to 574.00 euros, but they have gained more than 10% so far this year.

With sales of 6.5–6.7 billion euros in the second quarter, the corporation maintained its prediction for a 25% increase in sales this year.

Some significant businesses were “delaying the timing of their demand for certain tools,” according to finance chief Roger Dassen, while others were filling their orders.

He stated, referring to the two biggest kinds of computer chips, “For memory customers, we do see them limiting their capex… (and) we see some of that behavior also in certain segments of logic.”

($1 = 0.9118 euros)