ASML orders surge to record in 4th quarter, but 2024 outlook unchanged

By Toby Sterling

VELDHOVEN, Netherlands (Reuters) -Chipmaking equipment maker ASML Holding (AS:) on Wednesday reported fourth-quarter earnings that beat expectations and its best-ever quarterly orders, but it kept a cautious outlook for 2024 as it faces new restrictions on exports to China.

Shares in Europe’s biggest technology company by market value jumped more than 7% to their highest level in more than two years after its quarterly report.

ASML said its net profit rose 9% to 2.0 billion euros ($2.2 billion) on sales of 7.2 billion euros in the fourth quarter. That topped analyst expectations of a 1.87 billion euros net profit on revenue of 6.9 billion euros, according to LSEG data.

The company also registered orders of more than 9 billion euros in the quarter – more than triple third-quarter levels – but kept its outlook for flat sales in 2024 despite strong demand for artificial intelligence chips.

“The semiconductor industry continues to work through the bottom of the cycle,” CEO Peter Wennink said in a statement.

“Although our customers are still not certain about the shape of the semiconductor market recovery this year, there are some positive signs,” he said, citing improving demand for chips and higher factory utilisation rates.

ASML said it received orders of 5.6 billion euros for its most advanced “extreme ultraviolet”, or EUV, machines, including “multiple orders” for its new “High NA” extreme ultraviolet lithography systems.

“The EUV order intake has massively surprised on the upside, (with) some High NA orders in the order intake as well,” Robert Schramm-Fuchs, portfolio manager at ASML investor Janus Henderson told Reuters.

“The crucial thing for us this morning is it really dispels the bear argument on the midterm technology progression outlook.”

The new orders for equipment used to make high end chips will have been booked by companies like Taiwan’s TSMC, which makes chips for Apple (NASDAQ:) and Nvidia (NASDAQ:). TSMC, is ASML’s biggest customer, said last week its expected capital expenditure would be flat in 2024. Intel (NASDAQ:), Samsung (KS:), SK Hynix and Micron (NASDAQ:) also use ASML’s top equipment.

ASML dominates the global market for lithography systems that help create the circuitry of chips.

“After the good results and the good outlook from TSMC last week, people were hoping that they would increase their outlook for 2024. But they’re still a little bit conservative,” analyst Jos Versteeg of InsingerGilissen said of ASML’s outlook.

He said the company would likely raise its outlook later this year as end-markets continue to recover. ASML’s shares surged to their highest level since November 2021 in early trading and were up 7.4% at 759.20 euros at 1326 GMT.

The company said sales to China, usually its third-largest market after Taiwan and South Korea, would be impacted in 2024 by new U.S. and Dutch export restrictions introduced in 2023, affecting up to 15% of its China sales.

Chinese chipmakers have been expanding rapidly with government support despite weaknesses in the country’s economy, with a big build-out of relatively older chipmaking technology.

CEO Peter Wennink said that Chinese domestic demand for chips showed no sign of slowing, with the chip industry globally set to nearly double by 2030.

($1 = 0.9207 euros)