about 1 month ago • 2 mins
What’s going on here?
Chip-making equipment manufacturer ASML’s orders more than tripled last quarter, as businesses around the world fell for the allure of AI.
What does this mean?
ASML is the only producer of the most sophisticated chip-making equipment out there, so the firm’s order sheets indicate the health of the industry at large. And right now, the sector’s long-running slump is nowhere to be seen. A record €9.2 billion ($10 billion) worth of orders were placed with ASML during the fourth quarter of the year, making analysts’ estimates of €3.6 billion look positively puny. That helped pull last quarter’s profit up by a better-than-expected 13% from the same time the year before. So naturally, investors showed their approval by sending ASML’s shares 10% higher on Wednesday – the biggest gain since November 2022.
Why should I care?
Zooming in: The break-up of the year.
China was a loyal customer to ASML last quarter. In fact, Chinese companies made up over a third of ASML’s sales, as they rushed to furnish factories before US and Dutch chip export rules came into effect. Now, harsher restrictions are slated for later this year, denting the amount of orders that will come in from China. But with demand for AI-suitable equipment expected to stay steady elsewhere, ASML expects sales to remain flat this year.
The bigger picture: AI is here to stay.
ASML believes that AI will be a buoy for its business for years to come, as the tech needs a huge amount of computing power to run. TSMC – the main chipmaker for AI stock market superstar Nvidia – thinks the same, forecasting its revenue to tick up by 20% this year after falling nearly 5% last year. The Semiconductor Industry Association has spotted the signs, too, reporting that the AI theme helped global chip sales rise in November for the first time in over a year.
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