Dhe mechanical engineering group and IT supplier ASML finds itself in the midst of geopolitical shifts. He is a major producer of the machines that semiconductor companies like Intel and TSMC use to make their chips. Internationally, the chip industry is increasingly viewed as a critical infrastructure. This has two consequences for the group from Veldhoven in the south of the Netherlands. It benefits from the fact that Western countries want independent IT sectors. On the other hand, its supplies to China are under threat.
Irrespective of politics, the digitization of all areas of life is fueling the demand for chips. Cars, for example, are increasingly being equipped with electronics and information technology, said CEO Peter Wennink in a company video interview that ASML posted on its website on the occasion of the quarterly report. In addition, the “Internet of everything” is an unstoppable trend. That is why more factories are being built, also with state aid – as can be seen in Magdeburg, for example. “The geopolitical situation, the technological sovereignty that states are striving for, is driving these large investment and subsidy programs,” said Wennink. So that’s the geopolitical plus point from an ASML perspective.
Crux China
On the other hand, there is the China factor: For three years, the company has been waiting for approval from the Dutch government to deliver machines of the particularly sophisticated EUV generation. Following intervention by the United States, The Hague has not yet granted permission. Now the US government is pushing for ASML not to export certain types of the conventional DUV generation to China, as the financial information service Bloomberg recently reported. “It makes sense to always keep in touch with friends when certain investments have broader strategic implications around the world,” Foreign Minister Wopke Hoekstra later said, according to Bloomberg. Wennink left a question on the subject unanswered at an investor conference on Wednesday, but cautioned against excluding China entirely: “China is a major player in the industry.”
ASML increased sales in the second quarter by a good third compared to the same period of the previous year to EUR 5.4 billion. At 1.4 billion euros, net profit was more than twice as high as in the comparable period. Customers ordered more than ever before in one quarter, namely 8.5 billion euros. ASML has not been able to meet the high demand for a long time. However, the group lowered its sales forecast and halved the forecast for growth: Revenue for the full year will therefore now increase by 10 percent instead of the 20 percent previously predicted.
According to the company, this has accounting reasons: ASML no longer carries out late tests with its machines at its headquarters in Veldhoven before delivery, but at the customer’s site. Only then can he book the sales from it – so sales are postponed to the coming year. The volume of accelerated deliveries is much higher than previously calculated. According to the information, it adds up to a value of 2.8 billion euros, instead of the previously expected 1 billion euros. This is being driven by increasing difficulties from suppliers, “Restrictions in the supply chain are driving the rush deliveries,” said Wennink.
Higher costs due to inflation and investments in higher capacity are depressing the gross margin – at a very high level; it should be 49 to 50 percent this year, slightly less than originally estimated. The share lost 1.5 percent to 480 euros by the afternoon. ASML is in the leading European index Euro-Stoxx-50 with almost 200 billion euros the company with the second highest stock market value behind the luxury provider LMVH.
