ASML Holding NV Falls Short of Analyst Expectations Amid Chip Industry Downturn

ASML Holding NV, the world’s sole producer of equipment needed to make the most advanced chips, is facing a downturn in demand for its top-end extreme ultraviolet machines. The company posted new orders of €3.6 billion in the first quarter, falling short of analyst expectations of €4.63 billion. This decline in orders has caused ASML shares to drop by 7.3% on Tradegate.

The slump in demand for ASML’s most advanced machines is a result of weaker-than-expected sales in the chip making industry. Orders for extreme ultraviolet machines plunged to €656 million in the first quarter from €5.6 billion in the previous quarter. The company is expecting sales to remain weak in the second quarter before demand starts to pick up.

Despite the current challenges, ASML’s Chief Executive Officer, Peter Wennink, remains optimistic about the company’s outlook for the full year 2024. He expects the second half of the year to be stronger than the first half, in line with the industry’s continued recovery from the downturn.

ASML sees sales in the current quarter between €5.7 billion and €6.2 billion, missing estimates of €6.5 billion before demand picks up. The company’s Chief Financial Officer, Roger Dassen, believes that the industry is in an upturn and anticipates a stronger year in 2025.

While ASML’s business in Taiwan and the US has been affected by the downturn, its China business has remained relatively resilient. However, new export control measures have restricted ASML from selling certain equipment to China, affecting up to 15% of its sales in the country.

ASML’s chief business officer, Christophe Fouquet, will take over as CEO when Wennink retires later this month. He will have to navigate geopolitical pressures from the US while satisfying shareholders accustomed to growth. Despite the current challenges, ASML’s biggest customers, like Taiwan Semiconductor Manufacturing Co., have been posting positive results, indicating a potential turnaround in the industry.

Overall, ASML remains optimistic about the future, expecting a recovery in demand and sales in the coming quarters as the industry continues to recover from the downturn.