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ASML still confident of industry uptick despite dip in orders

17 Apr 2024

Lithography giant sees its stock price fall from recent record high but remains confident of 2024 recovery and strong 2025.

The stock price of ASML fell in value by more than 5 per cent after the semiconductor lithography leader announced a drop in orders in the first quarter of the year - but remains close to a record high as company executives continue to expect a major bounce in sales next year.

Sales of €5.3 billion for the March quarter were in line with prior expectations but down from the figure of €6.7 billion ASML had posted this time last year.

The dip follows a slowdown in the semiconductor industry as chip manufacturers and their customers work through stockpiles.

ASML’s executive team believes that slowdown is coming to an end in what they have called a “transition” year, ahead of a strong rebound in 2025 driven by chip requirements across AI, embedded sensors, electrification, and upgrades to power grids incorporating ever more renewable and intermittent energy sources.

‘Lumpy’ orders
Of apparent greater concern was a decline in quarterly orders from €9.2 billion in the closing quarter of 2023 to €3.6 billion in the latest figures.

However, company CFO Roger Dassen attributed that volatility to the natural “lumpiness” of order intake for extreme ultraviolet (EUV) systems costing upwards of €150 million per unit - stressing that ASML was already fully booked for the remainder of 2024.

“I think it's important to recognize that the order intake over the past six months, so if you take the Q4 and the Q1 order intake together, you're looking at nearly €13 billion, which is a pretty significant number,” Dassen told an investor conference call, with CEO Peter Wennink adding:

“The relatively slow first quarter is consistent with our expectations coming out of a downturn.”

While sales revenues are expected to rise to around €6 billion in the June quarter, there should be a more significant uptick in the second half of the year, with the ASML team confident that annual sales will come close to matching the record-breaking total of €27.6 billion posted by the company in 2023.

“We are building up for a stronger year in 2025,” Dassen added. “That means for us building a capacity and preparing for that ramp.”

CEO switch
The latest investor call represented the last one that Wennink will take part in, after more than a decade as ASML’s CEO and 25 years with the company overall.

The firm’s current chief business officer, Christophe Fouquet, is taking over from Wennink immediately following ASML’s annual general meeting next week, and used the investor call to provide an update on recent progress with the latest EUV equipment.

That includes shipment of the very first high numerical aperture (high NA) equipment to lead customer Intel, followed by so-called “first light” announced at February’s SPIE Advanced Lithography conference in San Jose, and now the very first images from the high NA tool at ASML’s Veldhoven laboratory, producing lines 10 nm wide.

“We expect to start exposing wafers in the coming weeks,” Fouquet said, with Dassen adding:

“The industry is really excited around high NA and for very good reasons. Because if you look at the specifications of the high NA tool, it will provide a transistor density that actually is three times the transistor density that you will have with a low NA tool. So it's a really big step up.”

Other developments on the EUV front include an upgrade to NXE:3800 (low NA) systems that will increase throughput from 160 wafers per hour (wph) to first 195 wph, and then 220 wph in the tool’s final configuration.

“That's a 37.5 per cent increase in productivity,” the CFO pointed out. “So that's a big deal. It also comes with better overlay [and] better imaging.”

Long-term shareholder gains
Immediately following the latest update ASML’s stock price was down around 7 per cent on its prior close on the Nasdaq, trading at close to $900.

However that fall was from the all-time highs of just over $1000 hit in recent weeks, with the firm’s market capitalization still easily topping $300 billion. The latest price is also around ten times the company’s valuation back in July 2013, when Wennink took over from previous CEO Eric Meurice.

Over the same period, ASML’s annual sales revenues have ballooned from the 2013 total of €5 billion, and are set to exceed €30 billion for the first time in 2025 - largely thanks to the introduction of EUV tools, of which ASML remains the sole provider.

ECOPTIKBerkeley Nucleonics CorporationCeNing Optics Co LtdTRIOPTICS GmbHIridian Spectral TechnologiesSPECTROGON ABLASEROPTIK GmbH
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