ASML profit down amid China chip spat

THE HAGUE: Dutch tech giant ASML, which supplies chip-making machines to the semiconductor industry, yesterday reported a drop in net profit and orders amid a high-tech trade spat between China and the West.

Net profit came in at €1.2 billion (RM6.2 billion) in the first quarter, compared to €2 billion the firm reported in the fourth quarter of last year.

Bookings slumped to €3.6 billion, a sharp decline from the €9.2 billion reported in the fourth quarter.

Company shares slumped more than 6% at the opening bell of the Amsterdam stock exchange, which was down 0.7% overall.

ASML is one of the leading manufacturers of equipment to make state-of-the-art semiconductor chips, which power everything from mobile phones to cars.

But the semiconductor industry has become a geopolitical battleground as the West seeks to restrict China’s access over fears the chips could be used for advanced weaponry.

ASML announced this year that it had been blocked from exporting “a small number” of its advanced machines to China, amid reports of US pressure on the Dutch government.

Chief executive Peter Wennink said the firm was still upbeat for the second half of 2024, which ASML has identified as a “transition” year before a stronger 2025.

“Our outlook for the full year 2024 is unchanged, with the second half of the year expected to be stronger than the first half, in line with the industry’s continued recovery from the downturn,” he said in a statement.

Overall sales in the first quarter came in at €5.3 billion, lower than the €7.2 billion from the fourth quarter but in the range the company had forecast.

In its annual report published in January, the firm had forecast first-quarter sales of between €5 billion and €5.5 billion.

For the second quarter, the firm said it expected total net sales between €5.7 billion and €6.2 billion.

Chief financial officer Roger Dassen said investors should bear in mind that combined orders over the past two quarters amounted to €13 billion – “a pretty significant number”.

He said orders were “typically quite lumpy”, meaning wide variations can occur from quarter to quarter.

ASML employs 42,000 people worldwide, more than half of whom are based at the firm’s huge complex in Veldhoven, with a significant proportion coming from abroad.