ASML Holding NV (NASDAQ:ASML) stock fell 1.71% (As on April 18, 11:16:33 AM UTC-4, Source: Google Finance) after the company posted new orders that fell short of analyst expectations, hurt by a downturn in demand for its most advanced machines from the chipmaking industry. ASML has reported first-quarter earnings of 1.22 billion euros ($1.30 billion), and a worse-than-expected inflow of new bookings of 3.6 billion euros. Analysts had forecast net income at 1.08 billion euro, according to LSEG data, while analysts polled by Reuters had seen new orders around 5.4 billion euros.

ASML in the first quarter of FY 24 has reported the adjusted earnings per share of $3.38, beating the analysts’ estimates for the adjusted earnings per share of $2.84. ASML, the world’s sole producer of equipment needed to make the most advanced chips, saw a slump in demand for its top-end extreme ultraviolet (EUV) machines, with orders plunging to 656 million euros in the period from 5.6 billion euros in the previous quarter. Overall sales in the first quarter came in at 5.3 billion euros, lower than the 7.2 billion euros from the previous quarter, but in the range the company had forecast. While the company was hit by weakness in Taiwan and the US, ASML’s biggest market for EUV machines, its China business remained relatively resilient. Sales there were 1.9 billion euros in the first quarter, down from 2.2 billion euros in the previous period, while the percentage of sales to China rose to 49 percent from 39 percent in the fourth quarter of last year.

The semiconductor industry has become a geopolitical battleground as the West seeks to restrict China’s access over fears the chips could be used for advanced weaponry, with Dutch and US export rules targeting the Veldhoven, Netherlands-based company’s ability to sell cutting-edge equipment to China. ASML has never been able to sell its EUV machines to China amid pressure from the US government. The company expects as much as 15 percent of China sales this year to be affected by the new export control measures.

ASML expects Q2 2024 total net sales to be between €5.7 billion and €6.2 billion, and a gross margin between 50% and 51%. ASML expects 2024 total net sales to be similar to 2023, with the second half of the year expected to be stronger than the first half. ASML sees 2024 as a transition year with continued investments in both capacity ramp and technology, to be ready for the turn in the cycle.