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17 Jul 2024
Stock price drops from all-time high on speculation of new restrictions to activity in China.
Lithography equipment vendor ASML has posted sales of €6.2 billion for its latest financial quarter, and maintained its outlook for a “transitional” year before a solid return to growth in 2025.
However, the Netherlands-headquartered company’s stock price dropped in value by around 10 per cent on apparent fears of further restrictions to business in China.
New CEO Christophe Fouquet, who has been at the helm since Peter Wennink’s retirement in April, said in an in-house interview:
“Our outlook for the full year 2024 has not changed. We expect a revenue similar to last year. As indicated before, and based on our current guidance, the second half of the year is expected to be significantly higher than the first half. This is in line with the industry's continued recovery from the downturn.
“While there are still uncertainties in the market, primarily driven by the macro environment, we expect a continued industry recovery in the second half of 2024.”
High-NA progress
Fouquet also reported some recent progress with the latest version of ASML’s CO2-laser-driven extreme ultraviolet (EUV) tools, which feature higher numerical aperture (NA) optics that will enable chip makers to increase transistor density by a factor of three.
“Regarding [the] high NA, or 0.55 NA system, we have shipped the second system this quarter,” he told an investor call. “Our first system is running qualification wafers at a customer. The second system is also now under installation and this is progressing well.
“Our customer interest for high NA is high. They are already using our system in the joint ASML-imec high NA lab in Veldhoven for initial wafer exposures and development. We have now achieved images with a resolution of 8 nm, which is a new world record.”
Thanks in large part to demand for artificial intelligence (AI) computing applications, Fouquet and his colleagues are expecting a cyclical upturn for the chip industry in 2025.
“As a result, we need to prepare for a number of new fabs that are being built today across the globe,” he commented. “Those fabs will be spread geographically and are strategic for all our customers. They are all scheduled to take our systems.”
ASML’s system bookings in the second quarter backed up that outlook, with the figure of €5.6 billion up from €4.5 billion in the same period last year.
China servicing fears
The firm’s latest figures also show that customers in China accounted for almost exactly half of its systems revenues in the first six months of 2024 - as well as more than 20 per cent of a near-€40 billion backlog.
That is despite existing restrictions imposed by the US and Netherlands governments that do not allow ASML to sell either EUV or deep-ultraviolet (DUV) immersion lithography tools in the country.
Thus far, ASML has been allowed to service immersion DUV tools that were shipped to China prior to those sanctions, but it now appears that this service revenue could be under threat from new restrictions.
According to a report by Bloomberg News, some analysts believe that the US government will now look to restrict service activity on tools that have already been installed.
Invited to comment on those rumors during the investor call, Fouquet and ASML’s CFO Roger Dassen declined to speculate, instead choosing to highlight the wider demand for chips made using more mature semiconductor manufacturing nodes.
Fouquet said that this demand remained solid - explaining why recent revenues from China have been strong. However, he and Dassen both pointed out that ASML’s modeling of future customer demand is based on the total number of wafers that need to be exposed using their tools - and is not specific to any particular manufacturing location.
“That capacity has to come from somewhere,” Fouquet said, with Dassen adding: “What we look at is the global demand for wafers - it doesn’t matter where the wafers are produced.”
• Immediately following the investor call, ASML’s stock price was down 10 per cent on its prior close, and trading at $961 on the Nasdaq. Despite that drop, the stock remains nearly 30 per cent up year-on-year, and equivalent to a market capitalization in the region of $400 billion.
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