ASML beats estimates but sees some caution in the chip industry

AMSTERDAM (Reuters) – ASML Holding NV (ASML.AS) beat first-quarter earnings forecasts on Wednesday due to continued strong demand for chipmaking equipment, but it signaled some signs of caution among customers.

The comments from Europe’s largest technology company follow news that Samsung (005930.KS) will cut production due to slumping demand for semiconductors, while memory chip makers SK Hynix (000660.KS) and Micron (MU.O) They have cut spending plans.

ASML reported a threefold jump in net profit to €1.96 billion ($2.15 billion) with revenue increasing 91% to €6.74 billion. Refinitiv data shows that analysts expected a net profit of 1.62 billion euros on revenue of 6.31 billion euros.

The Dutch company is ordered as of this summer to restrict exports of some equipment to China, after the Netherlands joined a campaign by the United States to restrict supplies to Beijing that may have “dual-use” military applications.

ASML said sales to China softened in the first quarter but are expected to be stronger through the rest of 2023, and added that its outlook remains strong despite the customer’s belt-tightening.

“Total demand continues to exceed our capacity for this year and we currently have a backlog of more than 38.9 billion euros,” chief executive Peter Winink said in a statement.

ASML plays a major role in the semiconductor industry because it dominates the market for lithography equipment used to create microcircuits for chips.

It has struggled to meet demand as TSMC (2330.TW), Samsung and Intel (INTC.O) spend billions on expansion.

“In our view, neither the company’s 2023 nor 2024 estimates are at risk,” JPMorgan said in a note.

ASML shares fell 2.5 percent to 574.00 euros at 0800 GMT, but are up more than 10 percent year-to-date.

The company maintained its forecast for sales growth of 25% this year, with sales of €6.5-6.7 billion in the second quarter.

Chief Financial Officer Roger Dassen said some big companies were “delaying the timing of their orders for certain instruments” but others were receiving their orders.

“For memory clients, we’re seeing them limit their capital expenditures… (and) we’re also seeing some of that behavior in certain pieces of logic,” he said, referring to the two largest classes of computer chips.

($1 = 0.9118 euros)

(Reporting by Toby Sterling) Editing by Shri Navaratnam

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