Europe’s leading technology firm, ASML Holding NV, encountered a setback as its recent order figures failed to meet analyst projections, primarily due to a decline in demand for its most sophisticated chip-making machines.
Bookings for the company totaled €3.6 billion in the first quarter, falling short of estimates by €1.03 billion. This decline follows a record-high of €9.19 billion in new orders reported in the fourth quarter.
ASML’s shares witnessed a 7.3% drop on Tradegate compared to their previous close in Amsterdam.
The company, renowned as the sole producer of equipment essential for manufacturing the most advanced chips, experienced a significant drop in demand for its top-tier extreme ultraviolet (EUV) machines. Orders for these machines plummeted from €5.6 billion in the previous quarter to €656 million in the reported period. ASML anticipates subdued sales in the second quarter before witnessing a resurgence in demand.
CEO Peter Wennink expressed confidence in the industry’s recovery, foreseeing a stronger second half of 2024. He described the year as a transitional phase for ASML.
Sales projections for the current quarter range between €5.7 billion and €6.2 billion, falling short of estimates by €0.3 billion before an anticipated increase in demand.
Despite challenges faced in Taiwan and the US, ASML’s China business remained relatively resilient. However, Dutch and US export regulations aimed at curbing China’s chip ambitions have impacted ASML’s ability to sell state-of-the-art equipment to China.
The company, which witnessed robust demand from China last year, faces restrictions on selling immersion DUV lithography machines to China under new regulations effective since January 1. ASML has never been able to sell its EUV machines to China due to US government pressure, and expects up to 15% of its China sales to be affected this year by export control measures.
Meanwhile, some of ASML’s major clients have reported positive financial results. Taiwan Semiconductor Manufacturing Co. recently announced its fastest quarterly revenue growth in over a year.
As CEO Peter Wennink prepares to retire later this month, Christophe Fouquet, ASML’s chief business officer, will take over. Fouquet faces the challenge of navigating geopolitical pressures from the US while satisfying shareholders accustomed to growth. Under Wennink’s leadership, ASML’s shares rose by nearly 1,400% over a decade.
