ASML The company reported better-than-expected second-quarter profit and sales as growing interest in artificial intelligence chips boosted demand for the Dutch company’s key semiconductor manufacturing equipment.
Here’s how ASML and LSEG compare to consensus estimates:
- Net Sales: 6.24 billion euros ($6.8 billion) Against forecast of 6.03 billion euros
- Net income: €1.58 billion compared to the expected €1.43 billion
ASML previously expected second-quarter net sales to be in the range of €5.7 billion to €6.2 billion. Net sales were down 9.5% year over year, and net profit was down 18.7%, smaller declines than in the previous quarter.
Net orders, a key market indicator that shows orders for ASML machinery, rose to 5.6 billion euros in the June quarter, up more than 24 percent from the same period last year.
The Dutch company is one of the world’s most important semiconductor companies and makes tools called extreme ultraviolet (EUV) lithography machines needed to make cutting-edge chips.
ASML had previously expected the semiconductor industry to start recovering after a tough 2023, calling 2024 a “transition” year. The company left its full-year outlook unchanged. ASML now said it expects third-quarter net sales of 6.7 billion to 7.3 billion euros. Analysts had been expecting the company to report revenue of 7.6 billion euros for the quarter.
“While there remains uncertainty in the market, mainly driven by the macro environment, we expect the industry recovery to continue in the second half of the year,” ASML CEO Christophe Fouquet said in a statement.
“We see 2024 as a transitional year with continued investment in both capacity expansion and technology. We now see strong developments in AI, ahead of other market segments, driving much of the industry’s recovery and growth.”
Some of the world’s largest semiconductor manufacturers, including Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung, are building new chip foundries in the United States.
“We expect the industry to enter a period of recovery in 2025, so we need to be prepared for a large number of new factories that are currently being built around the world, which are geographically distributed and strategic for all our customers. We will implement our systems in all of them,” Fouquet said in a pre-recorded video discussing the company’s earnings.
AI remains a “relatively small portion” of ASML’s revenue, according to Quilter Cheviot technology analyst Ben Ballinger, “but we think it’s going to grow significantly over the next few years,” he told CNBC’s “Squawk Box Europe.”
ASML also faces geopolitical headwinds. Under pressure from the U.S., the Dutch government last year restricted exports of advanced semiconductor equipment amid U.S. pressure to shut out China from key semiconductor manufacturing equipment. The measures affect ASML’s products, although China has never received ASML’s EUV equipment.
ASML has previously said the export restrictions would affect 10% to 15% of its sales in China this year.
But China remained an important part of ASML’s business in the second quarter, accounting for 49% of sales, the same as the previous quarter.
ASML shares have risen 44% this year amid a broader rise in semiconductor stocks.