ASML warns of flat 2024 sales as chipmakers slow orders

Semiconductor equipment maker ASML Holding (AS:ASML) NV reported lower than expected orders on Wednesday and warned of flat sales next year as customers conserve cash in an uncertain economic backdrop, hitting its shares.

Europe’s largest technology firm said the semiconductor industry was probably near a trough but that “customers continue to be uncertain about the shape of the demand recovery … we therefore expect 2024 to be a transition year”.

Customers are “being very cautious with cash, being very cautious with capex, and as a result of that, they’re also very cautious with putting in orders”, said chief financial officer Roger Dassen.

ASML shares were down 4.6% to 546.50 euros at 0725 GMT in Amsterdam.

The company reported net profit of 1.9 billion euros ($2.01 billion) for the three months ended Sept. 30, in line with analyst expectations.

Net bookings were 2.6 billion euros, compared with third quarter sales of 6.7 billion euros.

“Consensus expectations still call for 7% sales growth next year, which should come down today,” Stifel analysts said in a note.

ASML dominates the market for lithography systems, machines costing hundreds of millions of euros each that are used by chip makers such as TSMC, Samsung (LON:0593xq) and Intel (NASDAQ:INTC) to help create the tiny circuitry of chips.

Dassen said ASML still had an order backlog of 35 billion euros and a strong 2025 would follow an uncertain 2024, given its customers’ expansion plans in Asia, the United States and Europe.

Dassen said the company did not expect any financial impact from an updated U.S. policy announced Tuesday restricting sales of semiconductor equipment to China.

In recent years, China has been ASML’s third-largest market after Taiwan and South Korea, but it was the biggest in the third quarter, with 46% of sales.

Chinese customers were buying relatively older machines and ASML had warned them they would likely not receive licences from the Dutch government to buy one of its more advanced product lines starting in January.

($1 = 0.9446 euros)