The rapid advancement of artificial intelligence (AI) technology has fueled an increasing demand for high-performance chips, propelling the market demand for advanced chip manufacturing equipment, especially high-end lithography machines. The lithography giant ASMLdemonstrated its performance and future outlook under this trend in the latest Q2 2024 earnings report.

Performance Overview: Growth Beyond Expectations

ASML achieved a net sales amount of €6.24 billion in the second quarter of 2024, exceeding the company's previous forecast of between €5.7 billion and €6.2 billion. Although net profit decreased by 18.7% year-on-year to €1.58 billion, the decline narrowed compared to the previous quarter. In addition, the total order amount surged to €5.57 billion, a year-on-year increase of over 24%, with €2.5 billion from the Extreme Ultraviolet Lithography (EUV) system.

In the net system sales, EUV sales accounted for €1.5 billion, and non-EUV sales for €3.3 billion. The logic business contributed 54% of the net system sales, while the remaining 46% came from the storage business. This indicates that ASML has maintained robust growth in both main business areas.

Market Dynamics: Continuous Leadership of Mainland China

The Mainland China market accounted for as much as 49% of ASML's sales, becoming its largest market for four consecutive quarters. Despite facing the impact of external controls, the revenue share of the Mainland China region remains firmly at the forefront, showing strong customer demand for mature process chip production equipment.

Technical Progress: Continuous Evolution of Lithography Technology

As semiconductor technology nodes continue to evolve, the importance of lithography technology is becoming increasingly prominent. ASML successfully delivered a new batch of NXE:3800E systems to customers in the second quarter and is steadily advancing capacity enhancement plans. At the same time, progress has also been made in the field of 0.55 High Numerical Aperture (High NA) EUV lithography systems, with the delivery of the second device to customers.

Future Forecast: Prudent Expectations and Long-Term Growth

ASML expects the net sales for the third quarter of 2024 to be between €6.7 billion and €7.3 billion, with a gross profit margin expected to be maintained between 50% and 51%. Although 2024 is seen as a transitional year, ASML remains optimistic about long-term growth for 2025 and beyond, with net sales expected to reach between €30 billion and €40 billion, and further growth to between €44 billion and €60 billion by 2030.

The rapid development of AI technology is seen as the core force driving the recovery and growth of the semiconductor industry. ASML expects that as numerous wafer fabs around the world are about to be completed and put into operation, the demand for cutting-edge lithography equipment, including EUV, will continue to grow.

Despite ASML's strong performance, geopolitical factors, especially the restrictions imposed by the U.S. government on China in chip trade, have brought new uncertainties to ASML's business performance. It is expected that this will have a certain impact on ASML's sales in China.

Conclusion

ASML's Q2 2024 earnings report reflects the company's leading position in the global semiconductor market and the positive impact of AI technology on its performance. However, geopolitical factors and market dynamics also pose challenges to the company's long-term growth goals. ASML needs to maintain its technological leadership while flexibly responding to market and policy changes to achieve sustained good performance.

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