Europe’s largest tech company, ASML, is set to disclose its fourth-quarter results on Wednesday. This announcement will be carefully analyzed by investors who are eager to gauge the duration of the slump in the global semiconductor market.
ASML, a Dutch company that manufactures machines used in microchip production, plays a vital role in the tech industry worldwide. Therefore, the information offered by ASML's results will provide valuable insights into the overall health of this industry.
Additionally, these results will shed light on how much the company itself is affected by U.S.-led actions aimed at limiting China's emergence as a chip-making superpower. ASML has faced restrictions on exporting its machines due to these efforts.
According to analysts surveyed by Visible Alpha, ASML is anticipated to report a profit of €1.87 billion on sales of €6.9 billion, with 111 machines shipped. However, bookings are projected to take a significant hit, expected to decline by 45% to €3.5 billion for the Nasdaq-100 component.
In its previous quarterly report released in October, ASML revealed a 71% decrease in orders for its expensive lithography machines. The company attributed this decline to the caution exercised by customers amidst the global semiconductor market's downturn.
Nevertheless, ASML expressed its belief that the semiconductor market's slowdown will reach its lowest point by the end of this year, anticipating a subsequent recovery that will continue until 2025.
Just this month, Taiwan Semiconductor Manufacturing Co., the world's largest chipmaking company, surpassed analysts' expectations by reporting a smaller-than-expected drop in its fourth-quarter revenues.
TSMC's Q4 Results Indicate Potential Recovery in Semiconductor Market
TSMC's positive fourth-quarter results suggest a possible turnaround in the global semiconductor market, with experts attributing the resurgence to the surging demand for high-tech chips required by the artificial intelligence (AI) industry.
As the exclusive provider of extreme ultraviolet lithography machines necessary for producing cutting-edge chips in the AI sector, ASML is expected to reap the benefits of increased demand in this field. The company's advanced EUV systems are likely to experience a surge in demand as well.
Additionally, ASML's upcoming results will provide valuable insights into the implications of the export restrictions imposed by the Dutch government last July. These measures aimed to curb the export of high-tech lithography equipment to China, a country that accounted for 46% of ASML's third-quarter sales.
Although ASML's Chief Financial Officer, Roger Dassen, has previously stated that the restrictions would have minimal revenue impact, the cancellation of three pre-scheduled shipments to China following pressure from the Biden administration has raised concerns. Therefore, ASML's imminent results will indicate the true extent to which these regulations affect the company's operations.
While ASML's U.S.-listed shares have experienced a 15% growth over the past year, they have underperformed in comparison to the broader chip sector (SOX).