Positive signs for ASML.
Dutch technology giant ASML, which supplies chip-making machines to the semiconductor industry, on Wednesday reported a rise in its annual net profit despite a high-tech trade dispute between China and the West.
Net profits amounted to 7.8 billion euros ($8.5 billion) by 2023, the company said in its annual results, compared with 5.6 billion euros a year earlier.
“The semiconductor industry continues to work until the end of the cycle,” CEO Peter Wennink said in a statement.
“Although our customers are still unsure what the semiconductor market recovery will look like this year, there are some positive signs,” he added.
Traders cheered the results, with ASML shares rising around seven percent at the opening bell, outperforming the broader Amsterdam market, which rose 1.5 percent.
ASML is one of the world’s leading manufacturers of equipment for making next-generation semiconductor chips, which power everything from mobile phones to cars.
But the semiconductor industry has become a geopolitical battleground as the West seeks to restrict China’s access over fears the chips could be used for advanced weaponry.
ASML announced earlier this month that it had been banned from exporting “a small number” of its advanced machines to China, amid reports of US pressure on the Dutch government.
At the time, Beijing lashed out at what it called “bullying behavior” by Washington, adding that it “seriously violates international trade rules.”
China has called the restrictions imposed on exports “technological terrorism.”
Amid trade tensions with China, there are also concerns that Beijing could introduce its own export controls on gallium and germanium, two rare earth metals critical for semiconductor manufacturing.
ASML has downplayed the financial impact of geopolitical headwinds, and senior officials say the company is well positioned to weather the storm.
The firm said 29 percent of its sales came from China, more than double last year’s percentage (14 percent).
‘Significant growth’ by 2025
The company has said it expects sales to stabilize this year, which it has called a “transitional year,” before posting “significant growth” in 2025.
Total net sales for 2023 amounted to €27.6 billion, up from €21.1 billion in 2022.
The fourth quarter figures were also slightly better than expected: a profit of 2 billion euros and sales of 7.2 billion euros.
ASML said its portfolio was also strong, with net bookings almost tripling to €9.2 billion in the fourth quarter compared with €2.6 billion in the third.
“Our strong order intake in the fourth quarter clearly supports future demand,” Wennink said.
However, net reserves decreased throughout the year, to 20 billion euros, compared to 30.6 billion euros in 2022.
The firm said sales in the first quarter of this year were expected to slow compared to the pace set in the fourth quarter of last year, with a forecast of between 5.0 and 5.5 billion euros.
“Despite the positive signs outlined above, we maintain our conservative view for the full year and expect 2024 revenue to be similar to 2023,” Wennink said.
“We also expect 2024 to be an important year to prepare for the significant growth we expect in 2025.”
© 2024 AFP
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