ASML Shrugs Off Slowdown, U.S. China Sanctions, Reports Strong Q3

ASML Holding NV, a key equipment supplier to computer chip manufacturers, on Wednesday reported better-than-expected third-quarter sales and profit along with record new bookings, boosting its shares.

Europe's largest technology company also said it did not expect a large impact from U.S. sanctions on China.

CEO Peter Wennink said customers were focusing on plans to expand their long-term capacity, rather than the current economic slowdown and weakness in end-markets such as those for smartphones, personal computers or memory chips.

"The overall demand for our systems continues to be strong. This resulted in record bookings in the third quarter of around 8.9 billion euros," he said in a statement.

ASML shares rose 5.6% to 426.40 euros at 0716 GMT.

The Dutch company makes lithography systems, large machines that cost up to $160 million each and are used by chipmakers such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC), Samsung and Intel to create the circuitry of computer chips.

It is currently unable to keep up with demand from these companies as they are aggressively building new manufacturing plants with support from U.S. and European governments. ASML's backlog is now at 38 billion euros, and it is seeking to expand its own production capacity by 2025.

ASML reported third-quarter net profit of 1.7 billion euros ($1.7 billion) on sales of 5.8 billion euros, beating analyst forecasts of profit of 1.42 billion euros and 5.41 billion euros in sales.

"We expect these results to be taken positively but continue to think that some concerns on 2023 expectations are likely to linger given ongoing macro concerns," Credit Suisse analysts said in a note on the earnings.

The United States earlier this month issued sweeping new restrictions on exporting semiconductors to China.

ASML has been restricted by the Dutch government in shipping its best machines to China, due to U.S. diplomatic influence, since 2019. However, it still sells slightly older machines in China, where it had 16% of sales in 2021.

ASML said the impact of the new U.S. regulations appears limited given that it is a European company with few U.S. parts used in its machines.

"We can continue to ship non-EUV (less advanced) lithography tools out of Europe to China," the company said.

However, Chinese customers may have difficulty obtaining other parts they need, the company said. ASML noted that since it cannot keep up with orders in general at the present, if orders for tools from China slow, it could sell them elsewhere.

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