ASML Rises After Reporting Record Bookings, Downplaying China Sales Risks

By Geoffrey Smith

Investing.com -- ASML (AS:ASML) stock rose in early trading on Wednesday after the Dutch-based lithographer said it won't be badly affected by the latest U.S. restrictions on sales of silicon chips to China.

"Based on our initial assessment, the new restrictions do not amend the rules governing lithography equipment shipped by ASML out of the Netherlands and we expect the direct impact on ASML's overall 2023 shipment plan to be limited, ASML's president and chief executive officer Peter Wennink said in a statement.

ASML, which makes the machines that manufacture high-end semiconductors, has been pressured by Washington to withhold its state-of-the-art 'extreme ultraviolet' or EUV machines from Chinese customers, as a result of the growing hostility between the U.S. and China.

However, demand for its machines is booming due to related U.S. pressure on companies to relocate their manufacturing operations out of China and invest more in the U.S. Intel (NASDAQ:INTC), Samsung (KS:005930), and Taiwan Semiconductor (TW:2330) have all announced big plans for increased chipmaking capacity in the U.S. over the last year.

Such factors drove new orders to a record 8.92 billion euros ($8.78 billion) in the three months through September, of which 3.8 billion was for EUV machines.

Net sales rose 6.4% from the previous quarter to 5.78 billion euros, while the gross profit margin expanded to 51.8% from 49.1% as the company used its dominant market position to push through price increases.

Earnings per share came in more than 10% ahead of expectations at 4.29 euros, rather than the 3.91 expected.

Wennink said he expects sales to rise again in the fourth quarter, to between 6.1 billion and 6.6 billion euros, although the gross margin is expected to fall back to 49% again.

ASML stock rose 6.9% in Amsterdam by 04:00 ET (08:00 GMT). The stock has still been unable to resist the downward trend in technology names this year, and is down 40% year-to-date.