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ASML Sees 2021 Sales Up 30% as Chip Shortage Boosts Demand

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Natalia Drozdiak
·3 min read
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(Bloomberg) -- ASML Holding NV sharpened its full-year guidance as demand for its chip-making equipment soared during the global semiconductor shortage.

The Dutch company, a crucial supplier to Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., said it now expects 2021 revenue growth of about 30% from a year ago, compared to a previous target of “double-digit” growth. It also said it expects the full-year gross margin to be between 51% and 52%.

Shares rose as much as 5.8% in Amsterdam trading Wednesday and are up about 35% since the start of the year. ING Groep NV analyst Marc Hesselink called the full-year guidance a significant raise and said the results were “very strong,” in a note to investors.

Key Insights

Second-quarter revenue will rise to between 4 billion euros ($4.8 billion) and 4.1 billion euros, with a gross margin of about 49%, the company said in a statement on Wednesday. Analysts on average had expected a sales forecast of 3.95 billion euros and a gross margin of 50.2%, according to data compiled by Bloomberg.ASML reported first-quarter sales of 4.4 billion euros. That compares to the 4.03 billion-euro average estimate from analysts.“The main reason why it was above guidance is basically because of the market situation,” Chief Executive Officer Peter Wennink said. “You just read the papers, chip shortages everywhere.”Wennink said customers installed ASML software to upgrade machines and make them more productive.The roll-out of 5G, artificial intelligence and high-performance computing is also fueling demand.ASML shipped nine of its newest EUV machines in the first quarter, but recognized revenue for seven, amounting to 1.1 billion euros.The company said it still expects total EUV system sales this year to be 30% higher than 2020 and plans to ship 55 systems next year.The advanced EUV machines are needed to make chips that are faster, cheaper and more efficient.

Market Context

Carmakers have suffered the most from a global semiconductor shortage, but other industries, including telecom companies, are increasingly affected.TSMC last week boosted its capital expenditure plan for the year to $30 billion, from an earlier estimate of as much as $28 billion, and said the chip supply crunch may persist into 2022.Intel Corp. in March unveiled new plans to create a foundry business that will make chips for other companies.U.S., Europe and China are all seeking self-sufficiency in the production of cutting-edge semiconductors.“That will lead to higher capital intensity because it’s decoupling as a worldwide ecosystem, but it also leads to some capital inefficiency,” Wennink said. “There is a beneficiary of that capital inefficiency, and that’s us.”While ASML stands to benefit from the trend in the short-term, it has warned that it could take years for governments to change the existing global supply chain.ASML also has faced difficulty getting the Dutch government to renew a license to export its EUV systems to China amid ongoing trade tensions.

Get More

See more of the company’s presentation here.

(Updates with shares, analyst reaction in third paragraph)

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