CHIPMAKING equipment maker ASML Holding on Wednesday (Jan 24) reported fourth-quarter earnings that beat expectations and its best-ever quarterly orders, but it kept a cautious outlook for 2024 as it faces new restrictions on exports to China.

Net profit at Europe’s biggest technology company by market value rose 9 per cent to two billion euros (S$2.9 billion) on sales of 7.2 billion euros in the fourth quarter. That topped analyst expectations of a 1.87 billion euros net profit on revenue of 6.9 billion euros, according to LSEG data.

The company registered strong orders of more than nine billion euros in the fourth quarter – more than triple third-quarter levels – but kept its outlook for flat sales growth in 2024 despite strong demand for artificial intelligence chips.

“The semiconductor industry continues to work through the bottom of the cycle,” CEO Peter Wennink said in a statement.

“Although our customers are still not certain about the shape of the semiconductor market recovery this year, there are some positive signs,” he said, citing improving demand for chips and higher factory utilisation rates.

Taiwan’s TSMC, which manufactures chips for Apple and Nvidia and is ASML’s biggest customer, said last week its expected capital expenditures would be flat in 2024.

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ASML dominates the global market for lithography systems, equipment used by computer chipmakers to help create the circuitry of chips.

“After the good results and the good outlook from TSMC last week, people were hoping that they would increase their outlook for 2024. But they’re still a little bit conservative,” analyst Jos Versteeg of InsingerGilissen said of ASML’s outlook guidance.

He said markets might take that as a negative but predicted the company will raise its outlook later this year as end markets continue to recover. Shares closed on Tuesday at 707.10 euros in Amsterdam, up 3.7 per cent so far in January.

ASML said sales to China, usually its third-largest market after Taiwan and South Korea, will be impacted in 2024 by new US and Dutch export restrictions introduced in 2023, affecting up to 15 per cent of its China sales.

Chinese chipmakers have been expanding rapidly with government support despite weaknesses in the country’s economy, with a big build-out of relatively older chipmaking technology. REUTERS