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‘Positive Signs’ for Chip World as ASML Profits Soar

‘Positive Signs’ for Chip World as ASML Profits Soar

The Hague (AFP) – ASML, the Dutch tech giant that supplies chipmaking machines to the semiconductor industry, has reported a rise in annual net profit, defying the high-tech trade tensions between China and the West.

The company’s net profit for 2023 reached 7.8 billion euros ($8.5 billion), compared to 5.6 billion euros the previous year, according to its annual results.

ASML CEO Peter Wennink stated, “The semiconductor industry continues to work through the bottom of the cycle. Although our customers are still not certain about the shape of the semiconductor market recovery this year, there are some positive signs.”

The market responded positively to the news, with ASML’s stock soaring around seven percent at the opening bell, outperforming the wider Amsterdam market.

ASML is a leading manufacturer of equipment used to produce state-of-the-art semiconductor chips, which are essential for various applications, such as mobile phones and cars.

However, the semiconductor industry has become a battleground in geopolitics, with the West seeking to restrict China’s access to chips due to concerns over their potential use in advanced weaponry.

Earlier this month, ASML revealed that it had been barred from exporting “a small number” of its advanced machines to China, amidst reports of US pressure on the Dutch government. This move has caused tensions between China and the US, with Beijing accusing Washington of “bullying behavior” and violating international trade rules.

In addition to trade tensions, there are concerns that China may impose its own export controls on gallium and germanium, two rare earth metals critical for semiconductor manufacturing.

Despite these challenges, ASML remains confident in its ability to withstand the geopolitical headwinds. The company stated that 29 percent of its sales came from China, more than double the percentage from the previous year.

ASML expects flat sales this year, but anticipates “significant growth” in 2025. Net sales for 2023 reached 27.6 billion euros, up from 21.1 billion euros in 2022.

The company reported better-than-expected numbers for the fourth quarter, with profits of 2.0 billion euros on sales of 7.2 billion euros. ASML’s pipeline also remains robust, with net bookings in the fourth quarter nearly tripling compared to the third quarter.

However, net bookings for the entire year were down, indicating a slowdown compared to the previous year.

Despite positive signs, ASML maintains a conservative outlook for the total year and projects that revenue in 2024 will be similar to 2023. The company sees 2024 as an important year to prepare for the anticipated significant growth in 2025.

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