ASML Holding NV saw a 5% decline in shares on Wednesday after mistakenly releasing its third quarter earnings results a day early. The results included net bookings for its big market-leading semiconductor lithography machines that fell to half of what analysts had estimated, reaching 2.6 billion euros or $2.8 billion.
Several major fabs have pushed out expectations for purchases of ASML’s sophisticated lithography equipment into 2025, the company said on a call with analysts on Wednesday. Net sales for the quarter were 7.5 billion euros with a gross margin of 50.8% and net income of 2.1 billion euros.
CEO Christophe Fouquet in a statement and on the call said the upside potential in AI continues, but noted that other market segments for its products are taking longer to recover from years of supply shortages and surpluses that hit as a result of the pandemic into 2022 and 2023. “It now appears the recovery is more gradual than previously expected,” he said. “This is expected to continue in 2025, which is leading to customer cautiousness.” For fabs that make logic chips, he noted slower ramp-up times for certain customers.
Fourth quarter sales are expected to be higher than third quarter, between 8.8 billion and 9.2 billion euros and a gross margin between 49% and 50%.
While Intel was not named by ASML as pulling back its demand for litho equipment used in making logic chips, it is likely one example. Intel is cutting its budget for new gear by 20% this year and reducing capex for 2025. Other major fabs like TSMC and Samsung depend heavily on ASML.
Analysts on the call focused heavily on what is happening with ASML with sales into China, which accounted for 47% of ASML’s revenue in the quarter. ASML said the region will return to more normalized levels of 20% of all ASML sales in the future. China had hit higher levels in and 2023 and into 2024 as a result of adjustments to supply changes felt globally when Chinese companies were purchasing to correct a backlog.
“Growth drivers are still very much intact,” Fouquet said on the call. “AI and other applications continue to provide a strong and positive perspective…Despite some pushout we discussed, a number of new are being built, spread geographically. We’ll definitely build to demand.” He promised more details at an investor day meeting on Nov. 14.
At another point, Fouquet added, “We are still quite optimistic about AI. Without AI, the market would be sad, if you ask me. The recovery is not one we would have wished for.”
Chief Financial Officer Roger Dassen added, “We do believe inflow business will grow in a quite healthy way in 2025” with double digit growth in ASML’s installed base.
ASML is also concerned about reports of possible export controls by European and US officials that could prevent lithography sales into some countries. The US has worked to persuade allies to prevent ASML gear from being sold into China over concerns that the resulting chips produced could pose national security concerns.