Tech bellwether ASML warns of weak start to 2019

[THE HAGUE] The Dutch microchip-making machines giant ASML warned Wednesday of a slow start to 2019, largely due to a fire at a key supplier, despite posting record sales last year.

Sales rose to US10.9 billion in 2018, up by 20.8 per cent on the previous year, while net profit also rose to 2.6 billion euros (S$4.02 billion), up by 23.6 per cent, it said in a statement.

The company based in the southern Dutch town of Veldhoven is considered a leading indicator of the global high-tech industry as it supplies sector giants such as Samsung and Intel.

"Our fourth-quarter sales came in above expectations to wrap up a record 2018 in terms of sales and profitability," said ASML CEO Peter Wennink.

But shares in the company dipped on Wednesday after it said it expected a 300-million-euro hit to sales in the first quarter of 2019 because of the fire in December at Prodrive, which supplies electronics components.

"Work in progress and part of the inventory was lost" due to the fire, which would hit production, ASML said, although it expected sales to recover over the rest of the year.

The company also shrugged off worries about China, where the economy is slowing even as it is embroiled with a trade war with the United States.

"We continue to see solid demand for shipments to China," Mr Wennink said.

"Despite some uncertainty in the current environment, we remain confident about our sales and profit targets for 2020 and beyond."

ASML is one of the world's leading providers of lithography systems used by the semiconductor industry to make integrated circuits and microchips.

The lithography systems are used to manufacture processor chips, as well as memory chips such as DRAM and SRAM, essential for mobile phones and tablets.

AFP