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ASML raises 2023 forecast despite market caution

19 Jul 2023

Lithography giant now expects to post 30% sales growth this year, thanks to sales of DUV immersion tools.

ASML, the global leader in laser-based lithography systems for semiconductor wafer patterning, has posted sales of €6.9 billion for the second quarter of 2023 - and now expects annual revenue growth to outstrip its earlier prediction of 25 per cent.

Discussing the latest numbers ASML’s CEO Peter Wennink said that the company’s annual turnover is now likely to rise by around 30 per cent on the record-breaking 2022 figure of €21.2 billion.

If correct, that would suggest sales hitting €27.6 billion this year, nearly double the €14 billion reported for 2020.

EUV delays
In a video interview with ASML’s own public relations department, Wennink explained that the 2023 upturn comes despite a generally weak macroeconomic environment, and delays shipping extreme ultraviolet (EUV) tools because of a global shortage of people with the skills to build the advanced semiconductor wafer fabrication facilities where they are to be installed.

“Fabs are not ready yet, so we will ship the tools later,” the CEO said. “That means that the original quoted growth number of 40 per cent for EUV revenue this year will go down to about 25 per cent.”

The weak macroeconomic picture also means that ASML’s chipmaking customers are being cautious about upgrading their existing equipment.

“You don’t need to do an upgrade when you’re reducing the utilization of your installed base,” Wennink explained. “So, we now expect instead of a 5 per cent growth [on installed base upgrades], that [will] stay flat for this year.”

The primary reason for the increased sales forecast for 2023 is that ASML now expects to sell significantly more deep-UV (DUV) immersion lithography systems than it had predicted - with the added benefit that revenues for those tools are recognized as soon as they are shipped, rather than at installation.

“Where we originally anticipated that DUV would grow 30 per cent, now it will grow 50 per cent,” noted the CEO.

Export controls on DUV tools
Wennink also discussed the latest developments in export controls, which restrict sales of certain technologies to China - but reiterated previous comments that the impact on ASML’s business either this year or in the future would be minimal.

Existing controls cover EUV systems, meaning that ASML is not allowed to sell the cutting-edge tools to China. However the latest ruling, which has come from the Dutch government, covers DUV tools.

The CEO explained that the ruling becomes effective from the start of September, and deals with what he termed “advanced DUV immersion systems”. Specifically, this means ASML’s “NXT:2000i” tool and subsequent products, which so far include the “NXT:2050i” and “NXT:2100i”.

Asked about the likely impact on ASML’s DUV business, Wennink commented that the Dutch ruling was not a major surprise, and pointed out that further decisions are now awaited from the US.

“We’re waiting for the American rules to come out,” he said. “There have been some media reports that the Americans are contemplating some additional measures. Of course that is speculative. We don’t know what it is. But we understand [that] it will not have a major impact on what we said before.”

Megatrends
All in all, said the CEO, ASML does not expect a significant impact on its 2023 figures, or on the firm’s longer-term outlook.

And although the current macroeconomic weakness is now expected to linger beyond the end of this year, Wennink sounded a positive note for 2024 and beyond.

Pointing to the firm’s sales backlog of close to €40 billion, he said: “I think we see a very clear opportunity for growth in 2024. However, given all the increased uncertainties, I think it is too early to give any forecast.”

After next year, however, the long term “megatrends” of artificial intelligence, vehicle electrification, and the industrial "Internet of Things" should drive very strong growth across the entire semiconductor space, for both mature and advanced chip technologies.

By 2025, that could mean ASML posting annual sales of up to €40 billion - and of up to €60 billion by 2030.

• After the company issued its latest results, ASML’s stock price dropped very slightly on the Nasdaq. Currently trading at around $750, close to an all-time high, it has nearly doubled in value since hitting a low of $380 last October.

Mad City Labs, Inc.AlluxaCHROMA TECHNOLOGY CORP.Universe Kogaku America Inc.TRIOPTICS GmbHABTechLASEROPTIK GmbH
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