ASML Shares Trade Sideways Despite Upbeat Results, Guidance

The ASML Holding NV (NASDAQ: ASML) share price was trading slightly lower premarket despite announcing upbeat Q2 financial results and raising its full-year guidance based on the increased demand the company has witnessed from Chinese companies.

While many would not expect China to be the leading customer of ASML’s lithography systems, the country accounts for a large portion of ASML’s sales of its second-tier DUV, or deep ultraviolet, product line used for slightly older chips.

The Chinese customers are willing to buy machines that many other companies are shunning as they look to acquire ASML's EUV, or extreme ultraviolet, its most advanced systems. The Chinese customers are still demanding every tool they can get.

ASML confirmed that it had yet to sell a single EUV system to its Chinese clients due to export controls pushed by Washington to stop the Chinese from acquiring the technology to manufacture advanced microchips. 

The Dutch company revealed that it generated revenues worth €6.9 billion, marking a 28% improvement to last year’s figures, with net profits coming in at €1.9 billion, representing a 35% increase from last year. The revenues and net profits data both beat analysts' expectations. 

ASML specialises in manufacturing lithography machines that cost up to $200 million each and use lasers, lenses and mirrors to help create the minute circuitry of chips. The company supplies almost every other computer chip manufacturer and needs help to keep up with the demand for its machines. 

Peter Wennick, ASML’s CEO, said: “Our customers across different market segments are currently more cautious due to continued macro-economic uncertainties, and therefore expect a later recovery. However, our strong (order) backlog of around 38 billion euros ($42.6 billion) provides us with a good basis to navigate these short-term uncertainties.”

The company is expanding its manufacturing capacity to fulfil customer orders. The CEO also noted that chip makers who make the most advanced chips using ASML's EUV systems are slowing the pace at which they want equipment delivered.

The CEO further raised ASML’s full-year sales growth forecast to 30%, up from the previous 25%, partly due to robust demand from Chinese customers.

*This is not investment advice. 

ASML share price. 

The ASML share price was trading slightly lower for the day despite upbeat full-year sales forecasts.