ASML sees massive surge in orders especially from China, despite global tech sanctions

ASML Holding NV, Europe’s leading technology company, reported a substantial surge in orders during the last quarter, especially from China. This signals a potential recovery in the semiconductor industry. The company disclosed that order bookings for the fourth quarter reached 9.19 billion Euros or about $9.98 billion, more than tripling the 2.6 billion Euros recorded in the preceding three months. Analysts, surveyed by Bloomberg, had estimated an average of 3.6 billion Euros. A significant portion of the orders, amounting to 5.6 billion Euros, was attributed to ASML’s cutting-edge extreme ultraviolet lithography machines. This uptick in demand suggests a positive shift in the semiconductor market. While ASML had licenses for certain machines before the new restrictions, the company anticipates that up to 15 per cent of its China sales in 2024 will be impacted by the latest export control measures. Although ASML is not allowed to sell its latest lithography machines to China, because of US-imposed tech sanctions, China can still buy AI hardware that is not top of the line and not recent. China has used the same tactic with NVIDIA. Instead of acquiring NVIDIA’s top-of-the-line H200 and H100 AI GPUs, Chinese tech businesses have been going after NVIDIA RTX 4000 series GPUs, which are mainly used for gaming, but still have decent AI performance. ASML’s Chief Financial Officer, Roger Dassen, commented on the improved inventory levels in the end markets, noting a favourable trend compared to previous quarters. ASML holds a crucial position in the industry, being the sole producer of equipment required for manufacturing advanced semiconductors. The company’s performance is often considered a key indicator of the overall health of the semiconductor sector. In late 2023, ASML initiated shipments of major components for its latest chip-making machine to Intel, further affirming the strong demand for its products. The company also experienced heightened demand from China in the past year, driven by Chinese chip makers rushing to acquire lithography machines before Dutch export regulations impacted Beijing’s semiconductor ambitions. Despite facing challenges from global chip industry slowdowns, ASML’s sales in the fourth quarter rose to 7.24 billion Euros, compared to 6.67 billion Euros in the previous quarter. China accounted for 39 per cent of ASML’s sales during this period, down from 46 per cent in the previous quarter but significantly higher than the 8 per cent recorded in January to March. The CFO acknowledged the robust business with China in 2023, with net sales benefiting from the strong demand. However, ASML has been affected by the US government’s efforts to restrict exports of advanced technology to China, a crucial market for the company. Last year, the Biden administration urged the Dutch government to prevent ASML from shipping some lithography machines to China without a license. (With inputs from agencies)