ASML Warns of Flat Sales in 2024 as Chipmakers Reduce Orders
ASML Reports Lower Than Expected Orders and Predicts Flat Sales in 2024
Semiconductor equipment manufacturer ASML Holding NV (AS:) has announced that it received fewer orders than anticipated and expects flat sales in 2024. The company attributes this decline to customers conserving cash amidst an uncertain economic backdrop. As a result, ASML’s shares have been negatively impacted.
ASML Believes Semiconductor Industry is Near a Trough
ASML, Europe’s largest technology firm, believes that the semiconductor industry is likely at or near a trough. However, customer uncertainty regarding the demand recovery has led to caution in placing orders. Chief Financial Officer Roger Dassen explains that customers are being cautious with cash and capital expenditure. Consequently, ASML expects 2024 to be a transition year.
ASML Shares Experience a Decline
ASML’s shares have fallen by 4.6% to 546.50 euros at 0725 GMT in Amsterdam. Despite reporting a net profit of 1.9 billion euros ($2.01 billion) for the three months ended September 30, in line with analyst expectations, ASML’s net bookings were only 2.6 billion euros, compared to third quarter sales of 6.7 billion euros.
Concerns About Sales Growth in 2024
Stifel analysts have expressed concerns about sales growth expectations for next year. Currently, consensus expectations predict a 7% sales growth, but these figures are likely to be revised downwards given the current circumstances.
ASML Dominates the Market for Lithography Systems
ASML is the leading market player in lithography systems, which are used by major chip makers including TSMC, Samsung (KS:), and Intel (NASDAQ:). These machines, costing hundreds of millions of euros each, assist in the creation of the intricate circuitry of chips.
ASML’s Order Backlog and Future Plans
Despite the uncertain outlook for 2024, ASML currently has an order backlog of 35 billion euros. The company expects a strong 2025 due to its customers’ expansion plans in Asia, the United States, and Europe.
No Financial Impact Expected from Updated U.S. Policy
ASML does not anticipate any financial impact from the updated U.S. policy announced on Tuesday, which restricts sales of semiconductor equipment to China. Although China has been ASML’s third-largest market, ASML had previously warned Chinese customers that they may not receive licenses to purchase its more advanced product lines starting in January.
ASML’s success is closely tied to the overall performance of the semiconductor industry. As customers remain cautious amidst economic uncertainty, ASML faces challenges in maintaining its sales figures. However, with a strong order backlog and future expansion plans, the company remains optimistic about its prospects beyond 2024.