ASML, a manufacturer of chip-making equipment, reported a significant increase in orders for its most advanced machines in the last quarter. This surge indicates that producers of artificial intelligence (AI) processors are expanding their capacity ahead of China’s DeepSeek announcement, which triggered concerns about future demand.
Based in the Netherlands, ASML saw its market value drop recently as the stock market reacted negatively to DeepSeek’s news, which affected major companies like Nvidia and Broadcom, leading to significant losses in their market values.
DeepSeek’s innovative approach to AI, utilizing low-cost methods, demonstrated that substantial advancements might be achievable without the substantial investments in chips and computational resources that US firms like OpenAI and Meta have been planning. These developments are partly driven by US export controls that restrict China’s access to ASML’s equipment and high-end Nvidia chips.
Despite market concerns, ASML’s annual results revealed robust demand for the equipment needed by chip manufacturers, including major players like Taiwan Semiconductor Manufacturing Company, Intel, and Samsung, which provide cutting-edge chips for companies such as Nvidia and Apple.
Following the results announcement, ASML’s shares rose by 11% in early trading. The company disclosed that its net bookings in the fourth quarter reached €7.1 billion, significantly surpassing the €4 billion anticipated by analysts. Among these bookings, orders for EUV machines, ASML’s most advanced technology, accounted for €3 billion, exceeding expectations as well.
Overall net sales for the quarter increased by 24% to €9.3 billion, with a net income of €2.7 billion, slightly above predictions. ASML’s CEO, Christophe Fouquet, noted that strong demand for AI chip production was compensating for a generally weak semiconductor market.
He emphasized that the growth of artificial intelligence is a crucial driver for the industry’s expansion, influencing market dynamics that affect customers differently, presenting both opportunities and challenges looking toward future revenues.
ASML projected first-quarter sales between €7.5 billion and €8 billion, also ahead of analyst estimates, while maintaining its guidance for 2025 revenues to range between €30 billion and €35 billion.
Taiwan Semiconductor Manufacturing Company, ASML’s largest client, announced it will increase its capital expenditures this year to between $38 billion and $40 billion, signifying over a 30% hike as it anticipates a 45% annual compound growth in AI chip revenue over the next five years.
Analysts noted that the rise in EUV bookings for ASML was a positive development, particularly in light of the recent challenges faced by Intel and Samsung, which have been struggling to keep pace with TSMC in advanced chip manufacturing.
photo credit: www.ft.com
