Source: Brokerage China
Lithography machine can't be sold?
On April 17, it was reported that the share price of the global lithography machine giant ASML fell sharply before the market because the latest disclosed orders for the first quarter were far lower than market expectations, once falling more than 5%.
Previously, in the night trading session of the US stocks, ASML plummeted by more than 11%, and in the European market on April 17, ASML's share price fell by more than 6%. Nvidia was also dragged down, with the stock falling nearly 1% from a 0.8% rise in the U.S. stock market at one point during the night session.
Some analysts said that ASML's latest financial results were not the numbers that many investors hoped or expected, and that the decline was larger than expected, which could be a worrying early warning sign.
At present, ASML's market capitalization is US$385.5 billion, equivalent to about 2.74 trillion yuan.
ASML orders fell sharply
Today, ASML, the largest technology company in Europe by market capitalization and a leading global lithography machine company, released its financial results for the first quarter of 2024. According to the data, in the first quarter, the company added orders of 3.61 billion euros (including 656 million euros for EUV orders), well below the market expectation of 5.1 billion euros. Compared to the record order book of 9.19 billion euros in the fourth quarter of 2023, orders fell by almost two-thirds in the first quarter of this year.
After the above data was disclosed, in the European market, ASML's share price once dived and fell by more than 6%, and is currently down more than 4%. In the U.S. stock market, ASML's share price fell more than 11% in overnight trading, and then narrowed its decline. Before today's market, ASML fell more than 5% at one point, and fell about 4% as of press time. Nvidia was also dragged down, with the stock falling nearly 1% from a 0.8% rise to a dive during the night trading session of U.S. stocks.
Specifically, in the first quarter, ASML's sales were 5.29 billion euros, down 22% year-on-year and 27% quarter-on-quarter, compared to the average sales expected by analysts of 5.39 billion euros, and net profit of 1.224 billion euros, down 40% quarter-on-quarter and the consensus of 1.07 billion euros. ASML expects sales of €5.7 billion to €6.2 billion in the second quarter, below the consensus of €6.46 billion.
According to the financial report, ASML sold 66 new lithography systems and 4 used lithography systems in the first quarter, compared with 113 and 11 in the previous quarter, down 41.59% and 63.64% respectively from the previous quarter. Earlier this year, ASML admitted that it was experiencing problems with the delivery of some mainstream lithography machines, and that shipments to China were expected to be affected by 10 to 15 percent.
On April 17, Roger Dassen, chief financial officer of ASML, said that "I believe you have found that the situation of new orders is usually not stable. At the 2022 Investor Day, we forecast net sales of between €30 billion and €40 billion in 2025. In order to achieve the median of this target, which is 35 billion euros, we will reach the median of our net sales target at the beginning of 2025 if we receive new orders of more than 4 billion euros per quarter for the next three quarters. Roger Dassen said it will see a recovery in the industry in 2024 and the company is preparing for an even stronger year in 2025.
ASML CEO Peter Wennink said in a statement that the outlook for the full year remains unchanged and that the second half of the year is expected to be better than the first, in line with the industry's continued recovery from the downturn. Peter Wennink noted that 2024 is expected to be a transition year and will continue to invest in capacity and new technologies to prepare for the shift in the industry cycle.
It wants to "run away from home"
According to public information, ASML, headquartered in the Netherlands, is the world's largest lithography machine manufacturer, accounting for up to 80% of the high-end lithography machine market share. The EUV lithography equipment required by the world's chip manufacturers for the most advanced process chips all comes from ASML. Last year, weak demand for consumer electronics such as smartphones and laptops led to sluggish performance among chipmakers that produce semiconductors, which eventually passed on to ASML, where demand for the company's equipment weakened significantly.
At present, ASML has almost monopolized the global market share of lithography machines and holds the lifeblood of manufacturing advanced chips. Recently, ASML's plan to move its headquarters out of the Netherlands has attracted global attention.
In March this year, media reported that ASML had submitted an intention to the Dutch government to expand or relocate elsewhere, with France being one of the options. According to reports, the increasingly poor business environment in the Netherlands is the main reason. On the one hand, due to the long-term hollowing out of industry, the Netherlands, like many developed countries in the West, has continued to decline in the construction capacity and maintenance level of infrastructure, and the highways, housing, and power grids in the Eindhoven region are in a state of disrepair, adding a lot of costs to business operations.
On the other hand, the political environment in the Netherlands continues to be volatile. Although the Netherlands has one of the strictest immigration policies in Europe, the number of immigrants has increased significantly in recent years, leading to a rise in populist and conservative ideologies. In the 2023 general election, the far-right Freedom Party of the Netherlands won a resounding victory, and the leader of the party, known as the "Trump of the Netherlands", publicly announced that if he was in power, one of the important policies would be to curb immigration, including the removal of corporate tax breaks for skilled immigrants.
The news of ASML's intention to "flee" to other countries has alarmed the Dutch government. In order to keep ASML in the Netherlands, the Dutch government has set up a task force code-named "Beethoven Plan" to take charge of this work, which is personally led by the country's Prime Minister, Mark Rutte.
A few days ago, the Dutch government announced that in order to ensure that ASML does not move its business to other countries, the Dutch government will spend 2.5 billion euros (about 19.5 billion yuan) to retain ASML.
According to the plan, the funds will be used to improve infrastructure such as housing, education, transportation and power grid in Eindhoven, where ASML is headquartered, in the coming years. In addition to this, the Dutch government said in a statement that they will also take action to reduce the tax burden on businesses.
ASML welcomed the Dutch government's plan. However, in an email, ASML responded that the decision they need to make is not whether to stay, but where they will develop.
ASML was born in 1984 in the Dutch town of Eindhoven and has been established for 40 years. Currently, ASML employs 42,000 people worldwide, more than half of whom are based in the Netherlands. For the full year 2023, ASML's net sales reached €27.6 billion, up 23.2% year-on-year, gross margin was 51.3%, up 0.8 percentage points year-on-year, and net profit was €7.8 billion, up 28.3% year-on-year. The total order backlog amounted to 39 billion euros. ASML set a record order, mainly due to strong demand in China.
Editor-in-charge: Wan Jianyi
Proofreading: Wang Jincheng
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