ASML surpasses order estimates amid AI-driven chip equipment demand

ASML Holding reported stronger sales for the second quarter. The tech giant’s sales bookings reached €5.57 billion ($6.1 billion) which is 54% more than the previous quarter, according to a statement by ASML on Wednesday.

Also read: French authorities investigate Nvidia for alleged anti-competitive practices

Netherlands-based, Europe’s most valuable technology company, has beaten expectations with increased orders. The artificial intelligence (AI) boom has created demand for capital equipment, mainly machines used to make advanced computer chips. Market estimates were for €4.4 billion in sales, which ASML has beaten by a big margin.

ASML sees strong demand for chip-making equipment

ASML is a manufacturer of extreme ultraviolet (EUV) lithography equipment, which is essential for making advanced silicon microchips. Many companies in the semiconductor supply chain have benefitted from the surge in chip demand, and the same is the case for ASML, as these chips are essential for AI industry growth. Christophe Fouquet, chief executive of ASML, said in a statement .

“We currently see strong developments in AI, driving most of the industry recovery and growth ahead of other market segments.”

ASML has a monopoly in manufacturing the machines that are used for making advanced accelerators to power AI. Taiwan Semiconductor Manufacturing Company (TSMC) is the biggest customer of ASML machinery and its demand has provided a supportive cushion for higher sales.

TSMC’s sales for the second quarter grew at a fast pace because of data center investments around the world. ASML’s sales to Taiwan increased by €290 million in the second quarter as the demand for industrial equipment also rose highly.

ASML sold 89 lithography systems during the second fiscal quarter, which is almost 35% higher than the second quarter of 2023 when the company sold 66 systems. The Dutch firm also generates revenues from after-sales service for the installed systems.

China sales may go down

ASML CEO said the company sees 2024 as a transition year as it expects the investments to increase capacity and technology will continue. The firm’s sales for this year show an 18% increase on a year-on-year basis, while its net income of €1.6 billion is 29% higher than that of the previous year. The company’s estimate for third-quarter sales is to be somewhere between €6.7 billion to €7.3 billion.

The increased sales of ASML is mainly due to high demand from the Chinese market. However the company has said that nearly 15% of China sales will be affected this year from export control laws imposed earlier this year. 

Also read: TSMC surpasses market expectations with AI-driven Q2 revenue surge

ASML also repeated its previous guidance of expected sales figures to remain at the same level this year. At the same time, the company expects strong growth in the fiscal year 2025 as it anticipates sales to increase significantly.

The Netherlands also put a ban on exports to China to align itself with the US efforts to cut down Beijing’s advances in making advanced chips. This has prohibited ASML from supplying one of the most advanced machine equipment called immersion DUV lithography machines to the Asian nation. Even before that ASML was not allowed to sell its most advanced machines based on extreme ultraviolet technology to China.