ASML: Machinery demand remains strong despite inflation and China restrictions

ASML says there is still a lot of customer demand for its chip machines, despite the uncertainty within the chip market. Some customers say they prefer deliveries to be postponed, but other customers say they want machines faster.

Some customers have reduced the production capacity of their ASML machines, other customers have indicated that they will spend less on those ASML machines in the future, says Chief Financial Officer Roger Dassen. “For the first time in a long time, we also see that some customers even indicate that they want to receive machines later.”

Despite these downsides, largely caused by the current high inflation and declining consumer confidence, demand for ASML machines remains strong and outstrips supply. “The majority of our customers continue to push us when it comes to getting the chip machines, preferably as soon as possible.” If a customer then indicates a delay, other companies are eager to have their order brought forward again, according to Dassen. The order intake of 8.9 billion euros in the past quarter therefore remains a record number, says Dassen. ASML now has a total of more than 38 billion euros in outstanding orders.

In discussing the quarterly figures, Dassen also discusses the Chinese trade restrictions imposed by the United States. As part of these restrictions, companies are not allowed to supply chips and chip machines to Chinese companies that contain US technology without a license from the US.

The impact of these trade restrictions on ASML is limited, according to Dassen, with the caveat that the company has yet to fully evaluate the documents. Dassen says there is little American technology in ASML chip machines and that non-EUV lithography machines can be sold to Chinese companies as before. ASML does admit that President Biden’s decision could have consequences if it prevents Chinese companies from acquiring other machines that do contain American technology, preventing them from making certain products. Then those companies would potentially need no or fewer ASML machines.

ASML had a net turnover of 5.8 billion euros and a net profit of 1.7 billion euros in the past quarter. In the quarter, the Veldhoven company sold eighty new lithography machines and six used ones.