The inflow of orders for chip machines in the first quarter is disappointing at ASML. This was evident from the quarterly figures of the Netherlands’ largest high-tech company this morning.
After one order after another came in at the end of last year, it remained fairly quiet over the past three months. While the last quarter of 2023 ended with 9.2 billion euros in orders, this time the inflow amounted to 3.6 billion euros. The highly advanced EUV machines covered by the China embargo sold for 656 million euros. A total of 66 new lithography systems and four ‘second-hand’ systems were ordered compared to previously 113 and eleven. The stock market analysts were quite wrong with a total expected order inflow of five billion euros, a level that ASML normally achieves. Some analysts such as those from ING and Citi Research even expected six billion euros.
Range
The rest of the numbers were good. At 5.3 billion euros, turnover for the first quarter remained neatly within the expected range of five to 5.5 billion euros. The gross margin of 51 percent even exceeded the predicted 48 to 49 percent. ASML CEO Peter Wennink attributes this to a better product mix and one-off windfalls. The net profit amounted to 1.2 billion euros.
Net turnover of 5.7 to 6.2 billion euros is expected for the second quarter with a gross margin of between 50 and 51 percent. The costs of research and development amount to around 1,070 million euros.
In addition to the order flow, investors were eagerly awaiting ASML’s expectations for the whole of 2024. These remain unchanged. Wennink expects the second half of the year to be better than the first half, which is in line with the general recovery in the chip industry. The ASML CEO sees 2024 as a transition year in which ASML prepares for a new phase of growth in terms of production capacity and technology. The chip industry is always cyclical and is coming out of the valley. ASML currently has 40,940 permanent employees (FTE) and 1,773 temporary employees. A year ago there were 37,704 and 2,816 respectively.
Bright spot
Jean-Paul van Oudheusden, market analyst at trading platform EToro, calls the figures disappointing at first glance, but he also sees a bright spot. According to him, ASML is working towards adjusting its own target for 2025 upwards on the investor day in November.
“To achieve our stated targets for 2025, we still need to generate just over four billion euros in turnover per quarter in the remainder of 2024,” financial director Roger Dassen calculated in an explanation of the figures. Combined with the turnover expectation of between 5.7 and 6.2 euro billion for the second quarter and the recovery of the market in the second half of the year, this statement amounts to an implicit, positive adjustment of the objectives for 2025.
