ASML, the Dutch manufacturer and the world’s sole supplier of extreme ultraviolet (EUV) photolithography equipment, has reported a positive outlook for the semiconductor industry. Despite a recent downturn, CEO Peter Wennink stated that ASML achieved a 30% increase in sales to €27.6 billion ($29.5 billion) in 2023 and ended the year with a backlog of €39 billion ($41.7 billion) in orders. This solid performance came amidst a real downturn in the semiconductor industry, contrary to earlier predictions of a mild and short-term correction.
ASML expects continued demand for its systems in 2024, anticipating that the year will serve as a transition period. The semiconductor industry as a whole is recovering from the bottom of a downcycle, with increased demand for both advanced and mature semiconductors driven by trends like the green energy transition and artificial intelligence. Wennink also highlighted the construction of numerous new semiconductor fabrication plants globally, leading him to predict that the industry would double in size over the next decade.
However, geopolitical developments pose a risk to ASML’s business. The Dutch government and the US government have implemented export controls on semiconductor equipment, including some of ASML’s most advanced lithography systems. ASML is required to apply for export licenses from both governments and is subject to their decisions regarding whether to grant those licenses. Any further restrictions or changes to the list of restricted customers could significantly impact ASML’s bottom line, as customers in China accounted for 26.3% of its total net sales in 2023.
ASML is actively engaged in working with governments to help them understand the potential consequences of current and future regulatory measures. The company is also concerned about its ability to provide services to Taiwanese customers due to changes in relations between Taiwan and China, Taiwanese government policies, and other factors. Taiwanese customers represented 29.3% of ASML’s business in 2023.
In preparation for the expected surge in demand in 2025, ASML plans to target the production of 600 deep ultraviolet (DUV) tools and 90 extreme ultraviolet (EUV) tools by 2025-2026. The company intends to collaborate more closely with suppliers to enhance capacity and will pre-build its own inventory during 2024 for the first time in its history.
As Wennink prepares to step down as president and CEO at ASML’s 2024 AGM, he will be succeeded by the current chief business officer, Christophe Fouquet. This leadership transition marks an important milestone for ASML as it looks toward continued growth and innovation in the semiconductor industry.
