ASML Beats Expectations but Uncertainty in Chips Sector Weighs on Stock

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Shares in ASML Holding, a critical supplier to the global chip-making industry, were dropping Wednesday after the company said it sees “mixed signals” on demand despite improving profit and sales. 

Dutch company

ASML

(ticker: ASML) supplies the ‘lithography’ machines that are essential for manufacturing semiconductors, with customers including Taiwan Semiconductor Manufacturing (TSM), Samsung Electronics (005930.Korea), and Intel (INTC).

ASML reported first-quarter net income of €1.96 billion ($2.14 billion) compared with €1.82 billion a year earlier. Net sales for the first quarter rose to €6.75 billion compared with €6.43 billion a year earlier.

Analysts had expected first-quarter net income of €1.66 billion on net sales of €6.33 billion, according to a FactSet poll. 

“We continue to see mixed signals on demand from the different end-market segments as the industry works to bring inventory to more healthy levels,” CEO Peter Wennink said. “The overall demand still exceeds our capacity for this year and we currently have a backlog of over €38.9 billion.” 

In the Netherlands, ASML stock fell 2.7% in early trading.

For the second quarter, ASML said it expects net sales between €6.5 billion and €7.0 billion and a gross margin between 50% and 51%.

ASML expects 2023 net sales to grow by more than 25% compared with 2022, with a slight gross margin improvement. The full-year guidance was reiterated from earlier this year, when ASML said the U.S. push to restrict exports of high-end chip-making equipment to Chinese companies hadn’t changed its expectations.

Write to Adam Clark at [email protected]