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ASML beats Q4 profit expectations, exercises caution on 2024 outlook

Written by Wed 24 Jan 2024

Image Credit: Reuters

Dutch chipmaking equipment manufacturer, ASML, surpassed Q4 earnings expectations and attained record quarterly orders. However, the company expressed caution about its 2024 outlook due to new export restrictions to China.

ASML saw a 9% increase in net profit, reaching £1.7 billion ($2.2 billion) with sales totalling £6.1 billion ($7.8 billion) in its Q4 Results.

This surpassed the projected £1.5 billion ($2 billion) net profit on £5.8 billion ($7.5 billion) revenue, according to the London Stock Exchange Group projections. 

ASML also received orders of more than £7.6 billion ($9.8 billion) during Q4. This is almost three times higher than orders received in Q3.

The company has maintained its previous projection that its sales growth for 2024 will be flat despite the increased demand for artificial intelligence (AI) chips.

“The semiconductor industry continues to work through the bottom of the cycle. Although our customers are still not certain about the shape of the semiconductor market recovery this year, there are some positive signs,” said Peter Wennink, President and Chief Executive Officer at ASML.

Wennink said the industry end-market levels are continuing to recover and lithography tool utilisation levels are beginning to show improvement. Wennink added that ASML’s strong order intake in Q4 is indicative of future demand. 

ASML is a global leader in providing lithography systems, essential equipment for computer chip manufacturing. These systems enable the creation of chip circuitry. 

ASML said it expects Q1 net sales to range between £4.3 billion ($5.5 billion) and £4.6 billion ($5.9 billion) with a gross margin between 48% and 49%. The company also expects R&D costs of around £863,412 ($1.1 million) and SG&A costs of around £255 million ($326 million). 

“We maintain our conservative view for the total year and expect 2024 revenue to be similar to 2023. We also expect 2024 to be an important year to prepare for significant growth that we expect for 2025,” said Wennink.

US and Dutch Export Restrictions to Affect Chinese Sales

ASML said sales to China will be impacted in 2024 by new US and Dutch export restrictions introduced in 2023, affecting up to 15% of its China sales. China is usually ASML’s third-largest market after Taiwan and South Korea.

Earlier this month, the Dutch Government partially revoked ASML’s export licence following pressure from the US Government to halt exports to China.

ASML was expected to export shipments of its NXT:2050i and NXT:2100i extreme ultraviolet lithography systems to China until January when new Dutch restrictions take effect. However, ASML had its license partially revoked by the Dutch Government, impacting a small number of customers in China.

In October, US export restrictions curbing the sale of high-end AI chips to China came into effect.

The new restrictions are aimed at preventing countries like China, Iran, and Russia from acquiring advanced AI chips. They prohibit the sale of chips above a threshold of compute performance of connectivity.

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Written by Wed 24 Jan 2024

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