The company states that US sanctions on chips against China will have a “limited” direct impact on ASML due to being a European company
ASML posted record revenues and profits as demand for chipmaking equipment hit record highs despite slowing PC and smartphone sales. The company’s product backlog—including deep ultraviolet (DUV) lithography scanners and extreme ultraviolet (EUV) lithography tools—now exceeds $38 billion as chipmakers continue to invest in wafer equipment (WFE). As you remember this week we published that TSMC is reducing its capital investments for 2023, also because of the economic recession but also because of the limited supply capacity of machines made by ASML.
The reports also show that ASML continues to sell its DUV tools to Chinese customers. Furthermore, all current EUV customers have committed to High-NA EUV tools. Since it is a European company, the new US guidelines prohibiting sales to the Chinese chip sector without a special export license are not yet valid for it.
ASML’s sales in the third quarter amounted to 5.8 billion euros. The company has 80 new lithography systems as well as six refurbished scanners, including 12 EUV tools (according to the second quarter) as well as 74 DUV machines (down from 79 in the second quarter). The company’s profits reached 3 billion euros in the third quarter, while its gross profit margin reached 51.8%.
While demand for PC chips, smartphones and consumer electronics is weakening, chipmakers expect sales of their products to start growing in 2024-2025, when they will need new production capacity. Today there are many pubs being built by leading companies such as Intel, Micron, Samsung and SK Hynix that will need equipment in the coming years. For ASML this meant record orders of about 8.9 billion euros in the third quarter, of which 3.8 billion euros were EUV lithography tools.
It will take years for the company to deliver these tools, as its target production capacity for 2023 is over 375 DUV machines and over 60 EUV machines.
“ASML expects net sales in the fourth quarter between 6.1 billion euros and 6.6 billion euros with a gross profit margin of about 49%,” said Peter Vonnink, CEO of ASML. “For the entire year, we expect revenues of 21.1 billion euros with a gross profit margin approaching 50%.”