ASML, a prominent semiconductor firm known for producing extreme ultraviolet lithography machines, experienced a decline in its stock price by 4.5% following the announcement of missed sales forecasts. The company reported net sales of 5.29 billion euros, falling short of the expected 5.39 billion euros, while net profit stood at 1.22 billion euros compared to the estimated 1.07 billion euros. This marked a 21.6% decrease in net sales and a 37.4% drop in net income year-on-year.
The decrease in sales for ASML can be attributed to various factors, including weak demand for consumer electronics like smartphones and laptops, which impacted chipmakers relying on the production of semiconductors for these devices. Additionally, the transition in product expected in 2025 may have deterred some customers from making significant purchases, leading to a decline in net bookings for ASML’s machinery in the first quarter.
Analysts, such as Ben Barringer from Quilter Cheviot, expressed disappointment in ASML’s latest financial results, highlighting concerns about the shrinking Q1 orders and the overall economic uncertainty affecting customer purchases. The demand for ASML’s equipment might have been affected by customers holding off on spending due to the uncertain economic environment and potential upcoming product transitions.
Despite the challenges faced in the first quarter, ASML is optimistic about its future outlook, maintaining that the net sales for 2024 are expected to align with those of 2023. The company anticipates a stronger performance in the second half of the year, aligning with the industry’s recovery from the downturn. ASML’s equipment is primarily purchased by major chip manufacturers like Taiwan Semiconductor Manufacturing Co., Samsung, and Intel, who are all increasing their production capacity with support from the U.S. CHIPS and Science Act.
ASML’s sales to China, a significant market for the company, accounted for 49% of the total in the first quarter. Despite export restrictions imposed by the Dutch government on advanced semiconductor equipment last year, ASML noted an increase in sales to China. The company remains cautious about potential impacts from export restrictions moving forward, anticipating a 10% to 15% impact on sales to China for the year.
ASML’s recent financial performance reflects a mix of challenges and opportunities in the semiconductor industry. While the company faced setbacks in meeting sales forecasts, it remains confident in its long-term outlook and expects a rebound in the second half of the year. The impact of export restrictions and economic uncertainties present ongoing challenges for ASML, necessitating strategic planning and adaptation to industry trends for sustained growth.