ASML appears little shaken by the geopolitical quake in the semiconductor industry. Europe’s leading manufacturer of chip machines assesses the direct effects of the US restrictions on exports to China as “quite limited” for the time being: As a European company with little American technology in its products, it can deliver to China from here, said CFO Roger Dassen on the occasion the quarterly figures. They were above analysts’ expectations. The order books remain full, and demand continues to exceed production capacity. This also affects the German technology companies Trumpf and Carl Zeiss, which are key suppliers for ASML.
ASML sets a counterpoint in the semiconductor industry, which was recently characterized by negative news. The US government recently imposed broad export restrictions on high-performance chips and semiconductor manufacturing equipment. American companies that supply equipment to chip plants and provide on-site services quickly began relocating staff. ASML also reacted: In an internal email, the US management instructed employees in America not to support any customers in China, “directly or indirectly”, until further notice. ASML analyzes which locations are specifically affected by the rules.
“There is little US technology in our machines”
Now follows a partial all-clear from the headquarters in Veldhoven in the south of the Netherlands: The group is still checking the “very extensive document” with the orders of the US government, said Dassen. But ASML is a European company. “That means there is little US technology in our machines.” Therefore, apart from the machines of the latest generation, the EUV machines, one can deliver from Europe to China. For three years, ASML has been waiting in vain for an export license from the domestic government for these ultra-modern machines – the acronym stands for extreme ultraviolet radiation. The Hague held them back in 2019 after American intervention – a process that is independent of the new American restrictions.
But indirect consequences are now also possible for ASML, as Dassen said. For example, Chinese manufacturers could be cut off from essential equipment from the US, which then affects orders to ASML. But the company is busy with orders outside of China. “We are clearly in a position where supply is below demand,” the chief financial officer said. “The demand from outside of China is still such that we would get compensation from other customers in the current environment.”
Turnover of almost 5.8 billion euros
However, the industry has been unnerved that the world’s largest contract chip manufacturer TSMC slashed its investments by 10 percent because of an uncertain demand outlook. ASML CEO Peter Wennink also referred to the uncertainties in the chip market, with a view to high inflation, falling consumer confidence and the risk of a recession. ASML sees the first signs of diverging demand dynamics in different areas.
In the big picture, the company sees itself supported by the long-term trend of digitization in the world: that one everyday product after the next is being equipped with chips, from cars to parquet floors, as Dassen explained in the FAZ interview in April. Chip producers such as Intel and TSMC manufacture their electronic brains with the machines from Veldhoven – hardly any supplier can do without them.
In the third quarter, sales rose to almost 5.8 billion euros, after 5.4 billion euros in the previous quarter. The gross margin, which has received much attention from analysts, increased from 49.1 to 51.8 percent. The bottom line was 1.7 billion euros in profit after 1.4 billion euros in the previous quarter. According to the company, orders reached a record level. The stock rose more than 7 percent in price. ASML is the most valuable listed Dutch company – and in the Amsterdam leading index AEX number two behind the oil company Shell, which has given up its second seat in The Hague and is only based in London. ASML used to be a division of Philips, but has long eclipsed its old parent company in nearby Eindhoven commercially.
