ASML Rises After Flagging Capacity Expansion; Rising Costs Hit 1Q EPS

020, Apr 2022

( ASML (NASDAQ:ASML) reported another strong quarter as the global bottleneck in semiconductors led the Dutch-based lithographer to announce plans to increase production capacity for its high-end chipmaking equipment.


ASML, which has an effective monopoly on machinery for making the highest performance silicon chips, said it intends to raise its capacity for both deep ultraviolet (DUV) and extreme ultraviolet machines by 2025, adding that it will provide details in the second half. ASML stock in Amsterdam rose 2.7% in response to the news, making it one of the best performers in the local AEX index.

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"We continue to see that the demand for our systems is higher than our current production capacity,” CEO Peter Wennink said in a statement. “In light of the demand and our plans to increase capacity, we expect to revisit our scenarios for 2025 and growth opportunities beyond.”

The boom in demand for semiconductors since the start of the pandemic has left ASML in an enviable position, fielding a rush of orders for new equipment. Net bookings in the first quarter were 6.98 billion euros ($7.55 billion), down fractionally from the previous quarter. The gross margin also fell slightly due to higher input costs but at 49% was in line with the company’s previous guidance.

ASML repeated its full-year guidance of a 20% rise in sales, with the current quarter expected to generate between 5.1 billion and 5.3 billion euros in net sales at an unchanged gross margin of between 49% and 50%. The company expects relatively high research and development costs of 790 million euros for research and development and another 220 million in selling, general and administrative costs.

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Those costs, together with delays to the recognition of revenue from some sales, caused net profit to fall to 695 million euros in the quarter, equivalent to 1.73 euros a share.