ASML Sees 2021 Sales Up 30% as Chip Shortage Boosts Demand

(Bloomberg) -- ASML Holding NV sharpened its full-year guidance as demand for its chip-making equipment soared during the global semiconductor shortage.

The Dutch company, a crucial supplier to Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., said it now expects 2021 revenue growth of about 30% from a year ago, compared to a previous target of “double-digit” growth. It also said it expects the full-year gross margin to be between 51% and 52%.

Shares rose as much as 5.8% in Amsterdam trading Wednesday and are up about 35% since the start of the year. ING Groep NV analyst Marc Hesselink called the full-year guidance a significant raise and said the results were “very strong,” in a note to investors.

Key Insights

• Second-quarter revenue will rise to between 4 billion euros ($4.8 billion) and 4.1 billion euros, with a gross margin of about 49%, the company said in a statement on Wednesday. Analysts on average had expected a sales forecast of 3.95 billion euros and a gross margin of 50.2%, according to data compiled by Bloomberg.
• ASML reported first-quarter sales of 4.4 billion euros. That compares to the 4.03 billion-euro average estimate from analysts.
• “The main reason why it was above guidance is basically because of the market situation,” Chief Executive Officer Peter Wennink said. “You just read the papers, chip shortages everywhere.”
• Wennink said customers installed ASML software to upgrade machines and make them more productive.
• The roll-out of 5G, artificial intelligence and high-performance computing is also fueling demand.
• ASML shipped nine of its newest EUV machines in the first quarter, but recognized revenue for seven, amounting to 1.1 billion euros.
• The company said it still expects total EUV system sales this year to be 30% higher than 2020 and plans to ship 55 systems next year.
• The advanced EUV machines are needed to make chips that are faster, cheaper and more efficient.

Market Context

• Carmakers have suffered the most from a global semiconductor shortage, but other industries, including telecom companies, are increasingly affected.
• TSMC last week boosted its capital expenditure plan for the year to $30 billion, from an earlier estimate of as much as $28 billion, and said the chip supply crunch may persist into 2022.
• Intel Corp. in March unveiled new plans to create a foundry business that will make chips for other companies.
• U.S., Europe and China are all seeking self-sufficiency in the production of cutting-edge semiconductors.
• “That will lead to higher capital intensity because it’s decoupling as a worldwide ecosystem, but it also leads to some capital inefficiency,” Wennink said. “There is a beneficiary of that capital inefficiency, and that’s us.”
• While ASML stands to benefit from the trend in the short-term, it has warned that it could take years for governments to change the existing global supply chain.
• ASML also has faced difficulty getting the Dutch government to renew a license to export its EUV systems to China amid ongoing trade tensions.

Get More

• See more of the company’s presentation here.

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