ASML Targets 2024 Revenue Similar to 2023-level Despite China Crisis

ASML Holding, a chipmaking equipment manufacturer, has announced robust financial results for the fourth quarter of 2023 and provided insights into its outlook for the year 2024.
ASML Holding chip businessIn the fourth quarter of 2023, ASML achieved sales of €7.2 billion, boasting a gross margin of 51.4 percent and a net income of €2.0 billion ($2.2 billion). Notably, the company registered net bookings of €9.2 billion, with €5.6 billion attributed to Extreme Ultraviolet (EUV) lithography systems.

For the full year 2023, ASML reported sales of €27.6 billion, a gross margin of 51.3 percent, and a net income of €7.8 billion. The success was attributed to a 30 percent growth in EUV system sales, reaching €9.1 billion, and a 60 percent increase in Deep Ultraviolet (DUV) system sales, totaling €12.3 billion. ASML also acknowledged the decline in Metrology & Inspection system sales by 19 percent to €536 million due to lower YieldStar systems sales.

Looking ahead to the first quarter of 2024, ASML anticipates net sales ranging between €5.0 billion and €5.5 billion, with a gross margin between 48 percent and 49 percent. The company expects research and development costs of approximately €1,070 million and selling, general, and administrative costs of around €300 million. Despite the positive indicators, ASML maintains a conservative stance for the entire year, projecting 2024 revenue to be on par with 2023.

“We expect 2024 to be an important year to prepare for significant growth that we expect for 2025,” ASML President and Chief Executive Officer, Peter Wennink, said in its earnings report.

While the company has received orders exceeding €9 billion in the quarter, tripling the levels of the third quarter, ASML has upheld its prediction of flat sales growth in 2024. ASML Holding CEO Peter Wennink acknowledged the semiconductor industry’s ongoing recovery, citing positive signs such as increased demand for chips and higher factory utilization rates.

ASML’s largest customer, Taiwan Semiconductor Manufacturing (TSMC), shared a similar outlook last week, with expectations of flat capital expenditure in 2024. Despite optimistic market conditions, ASML remains cautious about its business projections for 2024, a sentiment echoed by industry analysts, Reuters news report said.

Analyst Jos Versteeg of InsingerGilissen noted, “After the good results and the good outlook from TSMC last week, people were hoping that they would increase their outlook for 2024. But they’re still a little bit conservative.”

ASML highlighted challenges in its China market, expecting new U.S. and Dutch export restrictions to impact sales by 10-15 percent in 2024. CFO Roger Dassen confirmed that certain tools, not covered by Dutch licensing requirements, would face direct restrictions from the U.S., affecting shipments to China.

“We should expect that for 2024 we will not get export licenses for shipment into China for advanced immersion tools, so NXT:2000i and up, tools. We should also expect restrictions for a handful of fabs for NXT:1970i and NXT:1980i immersion tools,” Roger Dassen said.

Despite these challenges, ASML remains optimistic about demand from China for older equipment, emphasizing its solidity in 2023 and expectations for continued strength in 2024.