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ASML Gains as Robust Chip Demand Secures Bright 2022 Outlook

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By Dhirendra Tripathi

Investing.com – ASML ADRs (NASDAQ:ASML) traded 3% higher in Wednesday’s premarket after the maker of chipmaking equipment said revenue will grow around 20% in 2022, notwithstanding a recent fire at its Berlin plant.

ASML said it would continue to struggle to meet demand this year and forecast first-quarter sales of 3.4 billion euro at the midpoint of its guidance range. Gross margin is expected to be around 49%, down from 54.2% in the final quarter of last year.

“We experience higher demand for our systems than our production capacity can accommodate. Very strong demand in end markets puts pressure on our customers for more wafer output,” a release quoted CEO Peter Wennink as saying after the company disclosed its fourth-quarter numbers.

Demand is so strong that the company is shipping machines to its clients without conducting some of the tests on the equipment. Final testing and formal acceptance then take place at the customer site, the company said.

The robust demand is an outcome of the shift to digital and machines the world is going through, a pivot only accelerated by the pandemic.

The company made more positive announcements that are bosting the stock. ASML said it will double its 2021 dividend to 5.50 euro and has received a first order from Intel (NASDAQ:INTC) for a new machine that is still under development, reflecting the robustness of the market for chips and the willingness of the manufacturers to keep investing in new technologies.

Revenue jumped more than 17% to 5 billion euro ($5.7 billion) but was less than estimated. The company managed to generate higher margins to book a net profit of 1.8 billion euro. Gross margin for the quarter was 54.2% compared to 52% in the same period last year.

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