ASML Holding NV (NASDAQ: ASML) stock lost over 2.8% on 15th October, 2020 post weak third quarter of 2020 update. The firm’s third quarter system bookings came in at €2.9 billion, including €595 million for EUV systems. But they witnessed EUV demand reduction on the back of delay and customer’s node timing resulting in a net booking of four EUV systems. The Order intake was largely driven by Logic with 86% of bookings and Memory remaining 14%.
However, the firm shipped 10 EUV systems and recognized revenue from 14 systems this quarter. The Sales to China contributed 21% of system’s revenue this quarter and forecast sales to domestic Chinese customers to grow to above €1 billion this year, which includes sales to both Logic and Memory customers in China, with a mixed skew towards Logic this year, but trending to higher memory sales next year.
In Logic, the firm’s customers continue to see solid demand for advanced nodes in support of the build of the digital infrastructure, which includes secular growth drivers such as 5G, AI and high-performance compute. For Memory division, customers are witnessing decent demand in data centers, with better demand for consumer electronics. Customer’s expectations for higher bid growth next year and taking into account the longer lead times and qualification schedules for advanced litho. The firm is seeing a recovery in lithography demand for DRAM.
EUV system revenue contributed 66% of total system revenue, which is the first time EUV was higher than DPV system revenue. Net system sales reached €3.1 billion with Logic at 79% with the remaining 21% from Memory. The strength in Logic is driven by the high EUV revenues.
Gross Margin reached 47.5% while Net income was €1.061 million representing 26.8% of net sales, resulting in an NPS of €2.54. Cash, cash equivalents and short-term investments reached €4.4 billion.
For the fourth quarter of 2020, the firm forecasts Q4 total net sales in the range of €3.6 billion and €3.8 billion while sees Q4 installed base management sales to be around €900 million, boosted by solid demand for field upgrades and growing service revenue with an increase in contribution from EUV service. Gross margin for Q4 is expected to be around 50%, which is significantly higher than Q3, driven by higher immersion volume and improved DPV product mix.