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18.10.2023 10:08, Alexey Razin
The supply of lithography equipment, which is handled by the Dutch company ASML, is a time-consuming process and customers formulate a purchase budget in advance. For this reason, a sharp decline in orders for the company’s products in the third quarter is an important marker indicating the presence of problems in the semiconductor industry.
Image source: ASML
Today ASML reported reported its results for the third quarter of this year, disappointing industry analysts. The company reported that order book value for the period fell 42% sequentially to €2.6 billion, compared with investors’ expectations of €4.5 billion. According to CEO Peter Wennink, the macroeconomic situation the past three months have not improved. Both inflation rates and refinancing rates remain high, and many economic participants fear a recession in both Europe and the United States. From time to time, the geopolitical situation adds difficulties, added the head of ASML.
The company’s revenue fell sequentially for the first time in six quarters to €6.7 billion, although for the entire 2023 the manufacturer still expects to increase it by 30% compared to last year. On a year-on-year basis, ASML’s quarterly revenue grew 15.5%. But next year, ASML’s revenue will remain approximately at the current level, management admitted. However, the company’s profit in the last quarter decreased sequentially from €1.94 to €1.89 billion, which cannot be considered a significant deterioration, and in year-on-year comparison it increased by 11%. Moreover, the profit margin was maintained at 51.9%, higher than management’s expectations.
As Wennink noted, ASML clients are now working to overcome the protracted crisis, and the turning point may be the end of this year, after which improvement will begin. But so far market participants are not ready to say how fast it will be. For ASML itself, the next year will be a transitional year, as the head of the company put it, which is why the revenue forecast turned out to be conservative. But in 2025, the bet is on significant revenue growth. In the current quarter, ASML expects to earn between €6.7 and €7.1 billion and maintain a profit margin in the range of 50 to 51%. Research and development expenditure will increase sequentially from €992 million to €1.03 billion.
It is noteworthy that China generated 46% of ASML’s revenue last quarter, although three months before that its share did not exceed 24%, and in the first quarter it was generally limited to 8%. According to Wennink, Chinese customers are happy to purchase equipment that ASML customers in other countries refuse for various reasons. However, from January next year, new restrictions on the export of ASML equipment to China by the Dutch authorities will come into force. Changes in US export control rules announced yesterday will also have an impact on the company’s business, albeit only in the medium and long term, and not this year.
2023-10-18 07:08:00
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