ASML, a producer of extreme ultraviolet (EUV) lithography equipment essential for cutting-edge semiconductor manufacturing, reported first-quarter results that fell short of market expectations. ASML, whose largest customer is China, has been restricting exports of even general-purpose semiconductor production equipment to China since this year at the request of the U.S. government.
According to Bloomberg and other sources on the 17th (local time), ASML's first-quarter sales recorded 5.29 billion euros (approximately 7.8 trillion KRW), a 27% decrease compared to the fourth quarter of last year. Net profit during the same period also plunged about 40%, from 2.05 billion euros (approximately 3 trillion KRW) to 1.22 billion euros (approximately 1.8 trillion KRW).
Due to weak sales of smartphones and computers produced by major semiconductor companies, ASML's semiconductor equipment orders declined. ASML's new orders in the first quarter amounted to 3.61 billion euros (approximately 5.3 trillion KRW), significantly below the market expectation of 5.4 billion euros (approximately 8 trillion KRW). Due to the poor performance, ASML's stock price plunged 7% on the day.
ASML stated that sales to China accounted for 49% of total first-quarter revenue. Amid U.S.-led semiconductor equipment export restrictions, it is analyzed that orders surged as Chinese semiconductor manufacturers hurried to purchase ASML's older lithography equipment, which is not yet subject to export controls. The older equipment is used in semiconductor manufacturing for a variety of products ranging from refrigerators to smartphones.
ASML expects that up to 15% of its sales to China this year will be affected by export control measures. Starting this year, ASML's deep ultraviolet (DUV) lithography equipment, which is one step below EUV, is also subject to export restrictions to China.
Nevertheless, ASML anticipates that orders from Chinese companies will continue to account for about 20% of total orders. Roger Dassen, ASML's Chief Financial Officer (CFO), stated, "We expect strong demand from China to continue for the remainder of this year."
Recently, discussions have been underway between the U.S. and Dutch governments regarding limiting maintenance and servicing of high-priced equipment already sold by ASML to Chinese semiconductor companies. However, Peter Wennink, ASML's Chief Executive Officer (CEO), said, "At present, there is no reason why we cannot provide maintenance and servicing for equipment sold to Chinese companies."
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