ASML shares, a critical chip manufacturing firm, experienced a 5% decline as the company fell short of sales forecasts for the first quarter of 2024.
Despite maintaining its full-year outlook, ASML shares dropped approximately 4.5% in early European trade following the disappointing results. The company’s net sales reached 5.29 billion euros ($5.62 billion), falling short of the 5.39 billion euros expected by LSEG consensus estimates. Similarly, net profit stood at 1.22 billion euros, missing expectations of 1.07 billion euros.
The decline in net sales amounted to 21.6% year-on-year, while net income plummeted by 37.4%. ASML’s net sales for the quarter landed within the midpoint of the company’s guidance. Additionally, net bookings for ASML’s machinery, a closely monitored indicator, totaled 3.6 billion euros, marking a 4% year-on-year decrease and a significant drop of nearly two-thirds compared to the previous quarter.
ASML, renowned for producing extreme ultraviolet lithography machines crucial for manufacturing advanced chips globally, attributed the weaker demand to last year’s sluggish consumer electronics market, affecting chipmakers supplying components for smartphones and laptops. However, signs of recovery are emerging for ASML shares, with semiconductor firms like Samsung experiencing a rebound in demand.
Analysts expressed concern over the unexpected decline in Q1 orders, citing various factors such as economic uncertainty, product transition in 2025, and cautious spending by customers. Despite these challenges, ASML reiterated its projection for 2024, expecting net sales to remain similar to the previous year.
Outlook for 2024
ASML’s CEO, Peter Wennink, emphasized a positive outlook for 2024, foreseeing a stronger second half of the year aligned with the industry’s ongoing recovery. The company anticipates continued investments in capacity ramp and technology to prepare for the industry’s upturn.
Moreover, ASML’s optimism is buoyed by increased production capacity by major chip manufacturers like Taiwan Semiconductor Manufacturing Co., Samsung, and Intel, particularly in the United States. Funding support from the U.S. CHIPS and Science Act further reinforces this trend. ASML anticipates a convergence of factors by 2025, including new fab openings, strong secular trends, and the industry’s upturn.
While export restrictions to China introduced by the Dutch government last year may impact sales, ASML reported a surge in sales to China, comprising 49% of total sales in Q1, up from 39% in Q4 2023. Despite potential challenges, ASML remains optimistic about navigating the evolving semiconductor landscape.
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