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Dutch company ASML manufactures one of the most important pieces of machinery required to manufacture the most advanced chips in the world. US restrictions on chips have companies, including ASML, scrambling to figure out what the rules mean in practice.
Emmanuel Dunand | AFP | Getty Images
ASMLIt, one of the world’s most important semiconductor equipment companies, reported a jump in revenue and profits in the second quarter, but warned of “uncertainty” in the macroeconomic future.
The Dutch company makes the expensive machinery required to manufacture the world’s most advanced chips. It counts giants such as TSMC, the world’s largest semiconductor maker, among its customers.
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But ASML has also been caught in the middle of a technology battle between the US and China over the importance of the tools that make them.
Here’s how ASML performed in the second quarter versus Refinitiv’s estimates:
- Net sales– 6.9 billion euros ($7.7 billion), compared to the expected 6.72 billion euros. This represents an increase of 27% year over year.
- Net profit: 1.9 billion euros, compared to the expected 1.82 billion euros. This represents an increase of 37.6% year-on-year.
ASML said it expects net sales in the third quarter of this year to be between 6.5 billion and 7 billion euros.
The company also raised its forecast for 2023, and now expects its net sales this year to grow 30% year-over-year, up from a growth estimate of 25% previously.
ASML said the brighter outlook is due to strong revenue from its deep ultraviolet (DUV) lithography machine, which is used to manufacture memory chips. These run into many devices, from smartphones to laptops and servers, and can eventually be used for AI applications.
However, ASML CEO Peter Wenink warned of macro uncertainty.
“Our clients across the various market sectors are currently more cautious due to the continuing macroeconomic uncertainty and therefore expect a subsequent recovery for their markets. The shape of the recovery slope is also still unclear,” Winink said in a press release.
Companies that design and make the chips that go into finished products like smartphones deal with high inventory levels of these components. That’s because demand for end products, such as consumer electronics, remains weak.
This means that chip makers are slowing down their chip production and therefore using ASML tools less, Wenink said in a pre-recorded video interview on the company’s website.
There is no “significant impact” from Chinese export controls
ASML has been caught up in US pressure to cut off China from key technologies, including those involved in advanced semiconductor manufacturing.
Last October, the United States Blanket export restrictions on certain technologies to China, which Washington fears could be used for military applications or artificial intelligence. The Biden administration has been pressing allied countries to follow suit with similar restrictions.
In June, the Netherlands – where ASML is headquartered – imposed its own export restrictions on advanced semiconductor equipment. Companies will need a license from the government to export certain technologies.
At the time, ASML said those rules likely applied to some DUVs sold by the company.
While it was introduced by the Dutch government in June, it was first introduced in March and was not a “big surprise” to Weynink.
“In general, when you look at the export control measures in aggregate, we don’t expect a significant impact on 2023,” Winink added, but also on the longer-term outlook.
The CEO said ASML is waiting to see if there are any further restrictions from the United States, amid reports that Washington is looking into additional controls on technology exports to China.
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