ASML beats estimates, grapples with chip supply shortage

Amsterdam

ASML Holding NV, a crucial supplier to Samsung Electronics Co and Taiwan Semiconductor Manufacturing Co, beat analyst expectations for the first quarter, with US-China tensions doing little to disrupt strong demand.

Chief executive officer Peter Wennink said the chip industry needs to deal with the global chip supply shortage that's crippling carmakers around the world.

"This engine needs to start running again," Mr Wennink said. "We start from an undercapacity view today. So we'll just have to step up and ship more tools and more machines to get more semiconductor capacity out there."

ASML shares on Wednesday hit a record high in Amsterdam trading at 449.65 euros, a 2.2 per cent increase from the previous close.

The Dutch supplier of machines to make semiconductors expects revenue in the first quarter of between 3.9 billion euros (S$6.3 billion) and 4.1 billion euros, with a gross margin of up to 51 per cent, it said in a statement on Wednesday. Analysts had expected sales of 3.52 billion euros and a gross margin of 49.3 per cent.

ASML is insulated from the pandemic-induced economic downturn as customers like Intel Corp, Samsung and TSMC need its latest machines to make chips that are faster, cheaper and more efficient.

In the fourth quarter, ASML shipped nine of its newest EUV machines and won orders for six EUV systems representing 1.1 billion euros, which etch smaller circuits while increasing capacity and speed.

"The build out of the digital infrastructure and the continued technology innovation is relevant to the consumer, automotive and industrial markets and drives demand across our entire product portfolio," Mr Wennink said.

The company has struck an upbeat tone on future demand, underpinned by developments in artificial intelligence, high-performance computing and 5G wireless networks.

It's dismissed the long-term impact of US sanctions on Chinese companies, which bring ASML around 800 million euros in revenue a year. The company has suggested underlying demand will endure, even if it switches to other customers in the semiconductor supply chain.

ASML stock had risen 62.6 in the past 12 months, far out-pacing a 12.4 gain in the Stoxx Europe technology index. BLOOMBERG