ASML's order book expected to jump on AI chip boom
Send a link to a friend
[July 16, 2024] By
Toby Sterling and Nathan Vifflin
AMSTERDAM (Reuters) -ASML, the top equipment supplier to computer chip
makers, is expected to report an influx of new orders when its new boss
delivers second-quarter results on Wednesday, as customers expand
capacity to meet booming demand for AI chips.
Another focus will be whether Chinese firms have continued heavy
purchasing of equipment used to make older generations of chips such as
those used in electric cars, a concern for Western policymakers who have
curbed buying of more advanced technology.
Analysts say the company may upgrade guidance as key makers of
cutting-edge chips - including Taiwan's TSMC, which manufactures chips
for Nvidia and Apple, and reports earnings on Thursday - may increase
and accelerate equipment purchases.
ASML dominates the market for lithography systems, complex tools that
use lasers to help create the tiny circuitry of computer chips. It is
the only maker of lithography systems using extreme ultraviolet (EUV)
wavelengths, needed by TSMC to make the most complex chips for smart
phones and AI chips.
"We expect ASML's order received value to reach close to 5 billion euros
in the second quarter, higher than consensus estimates", Mihuzo analyst
Kevin Wang said, with strong orders from TSMC of ASML's EUV product
line.
The results are the first under ASML's new CEO Christophe Fouquet, who
took over the reins at Europe's biggest tech firm as it navigates the
ongoing U.S.-China fight over chips.
![](http://archives.lincolndailynews.com/2024/Jul/16/images/ads/current/guzzardos_lda_GENERIC_040524.png)
ASML, worth about 400 billion euros ($437 billion), has described 2024
as a "transition" year when business will be flat before rebounding
strongly in 2025, driven by demand for its most advanced tools.
Shares in the group have risen 45% this year and are trading near record
highs above 1,000 euros each, about 40 times forecast 12-month forward
earnings, significantly higher than the STOXX Europe 600 tech index.
A growing order book would reassure investors that demand for the
company's most advanced products is returning following a weak first
half of 2024, in which it relied heavily on orders of older equipment
from China.
[to top of second column] |
![](../images/071624PIX/busine71.jpg)
A smartphone with a displayed ASML logo is placed on a computer
motherboard in this illustration taken March 6, 2023. REUTERS/Dado
Ruvic/Illustration/File Photo
![](http://archives.lincolndailynews.com/2017/Jul/22/images/ads/current/rohlfs_lda_072017.png)
Analysts are expecting second-quarter net income of 1.41 billion
euros on revenue of 6.04 billion euros, according to the mean
estimate from 16 analysts, based on LSEG data.
That compares with net income of 1.94 billion euros on revenue of
6.90 billion euros in the same period a year ago.
ORDER BACKLOG
ASML had a 38 billion euro order backlog at the end of the first
quarter. That means it needs new orders of 4 billion-6 billion euros
each quarter to meet its forecast of 2025 sales at the upper end of
a 30 billion-40 billion euro range.
The company's machines, which cost up to $300 million each, have
delivery lead times of 12-18 months, and orders are closely
coordinated with customers including Samsung, Intel, and memory
specialists SK Hynix and Micron.
For slightly older generations of chipmaking technology, it competes
with Canon and Nikon of Japan. Chinese firms including Shanghai
Micro Electronics Equipment (SMEE) are attempting to develop
competing lithography tools.
But Chinese chipmakers, who are prevented by U.S.-led export
restrictions from obtaining ASML's best tools, have escalated their
purchases of older ASML equipment in the past year, representing
nearly half of company sales in the first quarter.
China's rapid increase means lost market share and more competition
for non-Chinese firms. The European Commission has begun polling
European chip industry firms on whether they feel Chinese state
subsidies are distorting markets.
ASML argues that world needs older chips, as was shown by shortages
during the COVID pandemic, and China is stepping in to supply them.
($1 = 0.9164 euros)
(Reporting by Toby Sterling; Editing by Jan Harvey)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
![](http://archives.lincolndailynews.com/2024/Jul/16/images/ads/current/ldn_smallsda_BUSINESSMAG_2023.png) |