ASML refers to the list of export restrictions imposed on the company over time as business risks. While the impact of the pandemic on the chip industry is slowly being faded out, good results in 2024 are not assured due to the export restrictions. In addition, the company is taking this year to prepare for 2025 and 2026, which should be better years.
ASML says it cannot offer certainty about future results. Outsiders do predict favourable numbers as the chip industry returns to normal levels after extreme shortages during the pandemic. However, the Dutch chip machine manufacturer says it has more challenges ahead.
Uncertain 2024
For example, the company faces an increasing number of export restrictions to China. During 2023 those restrictions had no impact. ASML made these statements in the release of its annual report. The company achieved a 30 percent increase in sales in 2023. The total came to 27.6 billion euros. Thirty-nine billion euros were open in back orders.
For 2024, the expectations of the chip machine producer are cautious. Despite the returned stability in the chip industry, it does not dare to put sales expectations above the results achieved in 2023.
It also keeps in mind that the relationship with Taiwan may deteriorate if it comes under the influence of China. According to the report, trade to Taiwan accounts for 29.3 percent of sales. Another 26.3 percent came in through China in 2023.
The latter figure sees ASML falling this year because of stricter trade restrictions as restrictions only recently apply to DUV machines as well. For high-tech EUV chip-making machines, the restrictions have been in place for some time.
In addition, ASML’s chip machines will soon face competition from Canon. That company expects to deliver a new range of chip machines this year. The equipment would be cheaper and more efficient than ASML’s.
Also read: Canon deploys new chip machines to take aim at ASML’s monopoly
Confidence in 2025
Although the company is still cautious in its 2024 predictions, it dares to be positive for the future ahead. That also contributes to the caution in 2024 because the company says it needs time to prepare itself for the future. The ambition is to have 600 DUV and 90 EUV tools by 2025-2026. Closer collaboration with suppliers should make it possible to obtain that capacity.
“For the first time in our history, we will prepare and create our own inventory in 2024 to prepare for the strong increase in demand we expect in 2025,” said Roger Dassen, CFO of ASML.
Peter Wennink, CEO of ASML, gives three reasons why belief is so strong in 2025-2026. First, he says the demand for advanced and mature semiconductors is growing because of the needs in the energy and AI sectors. In addition, there are strong indicators of semiconductor market recovery. For example, Wennink notes: “Our strong order intake in the fourth quarter clearly supports that there is demand going forward.” The third reason is very specific to ASML: “Finally, we need to prepare for a significant number of new semiconductor plants that are being built.” For example, a major expansion in Berlin is planned for the next few years.
The transition year takes shape
With the annual report, ASML is shaping its previously announced ‘transition year‘. The transition year furthermore gets a boost by the departure of CEO Peter Wennink. This happens because his term is over. He will be succeeded in April by France’s Christophe Fouquet. Fouquet himself has worked at ASML for 15 years.
One last uncertainty before 2024 ASML encounters at home. There, a strictly proposed immigration policy may put the brakes on the recruitment of foreign talent. That talent, however, is needed for continued development. For that reason, the company already announced that it will move abroad if it proves necessary.
Read also: ASML might soon expand to other European countries
Moreover, the Dutch government is usually agreeing with U.S. sanctions. This while export restrictions at the European level have been criticized before. Certain export restrictions would not even be allowed under international law. According to the chairman of the International Trade Committee, this urges for negotiations with America. But, there seems to be little concrete action against the American export restrictions.