ASML Holding NV (NASDAQ:ASML) stock rose 2.19% (As on October 19, 11:30:19 AM UTC-4, Source: Google Finance) after the company posted mixed third-quarter earnings and a 2024 sales forecast that fell short of analyst expectations. ASML made most of its revenue, or €5.3 billion, from new hardware sales, while the rest came from providing upgrades and support to existing customer installations of its equipment.
The company said its logic business accounted for 76% of its hardware revenue in the third quarter. That business makes chipmaking equipment geared towards processor manufacturing. According to ASML, the remaining 24% came from selling gear optimized for making memory chips.
Broken down by product category, €1.9 billion of ASML’s third quarter hardware revenue came from the sale of 11 EUV machines. DUV, or deep ultraviolet lithography, systems accounted for much of the rest. DUV systems use light to carve transistors into silicon wafers much like EUV equipment, but they have less advanced manufacturing capabilities. Lithography machines’ capabilities vary based on the wavelength of the light beams they generate. The shorter the wavelength, the smaller the transistors a machine can produce. ASML’s EUV systems lead the market with a wavelength of 13.5 nanometers, while its DUV machines operate in the 193-248 nanometer range.
The company’s net income of €1.89 billion easily topped the €1.8 billion that Wall Street had projected. ASML said that the earnings surprise was partly the result of several “one-off cost benefits” it realized in the third quarter. Another factor was strong demand for so-called immersion DUV machines, which have a higher profit margin than some of the company’s other systems. The company had reported the adjusted revenue growth of 15.5 percent to €6.67 billion in the third quarter of FY 23, beating the analysts’ estimates for revenue of €6.71 billion.
ASML doesn’t expect this momentum to continue into fiscal 2024. The company is projecting flat sales for next year, which is well below the 7% growth that analysts were expecting. ASML is attributing the slowed growth to the ongoing semiconductor industry slump, which has hurt the earnings of major chipmakers such as Intel Corp. and Samsung Electronics Co. Ltd. ASML expects demand to pick up again in 2025. The company’s order backlog, or the value of the equipment that customers have ordered but not yet received, currently stands at €35 billion.