Despite constraints, China remains the largest market for ASML, with orders up 24%.
Even though ASML’s earnings so far this year have been lower, over the last three months, the tech giant has seen a rise in orders for its chip manufacturing equipment.
The company’s earnings report for the second quarter of 2024 states that net bookings, or orders, increased by more than 24% year over year to €5.6 billion.
Orders for ASML’s EUV machines made up a sizeable portion, totaling €2.5bn. The Extreme Ultraviolet (EUV) lithography machines employed by this Dutch company are the only ones in the world that can generate chips as sophisticated as those used in artificial intelligence.
The increase in EUV orders is consistent with the rising demand for AI chips, which is also advantageous to chip manufacturers in the space, including ASML’s largest customer, TSMC.
Between Q1 and Q2 2024, the company’s revenues in Taiwan, the home of TSMC, climbed from 6% to 11%.
According to ASML President and CEO Christophe Fouquet, “we currently see strong developments in AI, driving most of the industry recovery and growth, ahead of other market segments.”
Following the slowdown in the semiconductor industry, Fouquet referred to 2024 as a “transition year,” echoing remarks made by former CEO and President Peter Wennink in the previous quarter.
Compared to Q1, ASML’s net sales and net income in Q2 of this year were higher at €6.2 billion and €1.5 billion, respectively. Nonetheless, they decreased by 18.7% and 9.5% annually.
In 2024, China continues to be ASML’s largest market.
Similar to Q1, 49% of ASML’s sales in Q2 of this year came from China. This is true even though all EUV machines and certain Deep Ultraviolet (DUV) machines—which employ antiquated chipmaking technology—have export restrictions.
China is becoming the world’s leading manufacturer of legacy chips, which are used in everything from EVs to domestic appliances.
This is because China is limiting access to cutting-edge chipmaking gear as part of a chip war with the US (and its allies).
According to Bloomberg, which cited insider sources shortly before ASML released its numbers today, the US is thinking of pressing its partners even harder to forbid maintenance of equipment that have already been sold to China.
A fortnight ago, Peter Wennink stated in an interview with the Dutch radio station BNR that the US-China chip war might drag on for “decades.”
Over time, it will become clear how ASML’s involvement in the geopolitics of semiconductors will affect the company. As of right now, the company projects greater Q3 net sales in 2024—between €6.7 billion and €7.3 billion.
