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ASML raises forecasts on semiconductor shortage, China shipments

Toby Sterling
·2-min read

By Toby Sterling 

  AMSTERDAM (Reuters) -ASML Holding NV, one of the biggest suppliers to semiconductor companies, beat first-quarter net income forecasts on Wednesday and raised its full-year sales expectations, citing strong demand amid a global computer chip shortage. 

  The company now sees full-year sales growth at 30%, up from a forecast of at least 10% in January. CEO Peter Wennink said the increase was partly due to more certainty around ASML's ability to ship equipment to customers in China this year. Geopolitical tensions had raised fears about obstructions. 

  "Compared to three months ago, we are seeing a significant increase in demand across all market segments and our product portfolio," Wennink said. 

  Strong sales of consumer electronics in the pandemic, stockpiling in China and supply problems have created a global shortage of semiconductors that has hit a variety of industries. 

  ASML shares, up 35% so far this year, were 4.4% higher at 534.70 euros at 1440 GMT. 

  Wennink said that in addition to demand for the company's hardware, customers were buying utilisation software in order to increase capacity as quickly as possible, which helped margins. 

  ASML customers include all major chipmakers. TSMC, Samsung and Intel have all recently announced expansion plans that will require ASML equipment. 

  On China, Wennink said the company's order book now included 600 million euros in shipments only considered as potential in January. 

  "If some of that 600 million were not there due to geopolitical roadblocks, then demand is such that we would ship those systems somewhere else," he told an earnings call. 

  ASML posted a quarterly net profit of 1.33 billion euros ($1.60 billion) on sales of 4.36 billion. Analysts had expected profit of 1.08 billion and 4.02 billion in sales. 

  Based in the Dutch town of Veldhoven, ASML is the dominant maker of lithography systems, enormous machines that focus beams of energy to help map out the tiny circuitry of computer chips and cost up to 200 million euros each. 

  The company said net bookings had improved to 4.74 billion euros at March 31 from 4.24 billion at the end of 2020, and that it was expanding supply chain capacity for its newest machines by 10% in 2022. 

  The bulk of ASML's sales are to Taiwan and South Korea, with China third and the United States fourth, though its sales to China face export licence restrictions as some of its machines are considered "dual use" technology with military applications. 

  Wennink said recent plans by the United States and Europe to build up their computer chip industries in a quest for "technological sovereignty" were another driver of demand for its products. 

  While such moves may not be the most efficient use of governments' capital, Wennink said: "There is a beneficiary of that capital inefficiency - and that's us." 

  ($1 = 0.8315 euros) 

  (Reporting by Toby Sterling. Editing by Shailesh Kuber and Mark Potter)