ASML order book fills as chipmakers rush to increase capacity

  • ASML says demand from chipmakers remains strong
  • The company raises its sales growth outlook in 2021 to 35%
  • Dutch company announces € 9 billion share buyback
  • ASML’s second quarter net profit up 38%

AMSTERDAM, July 21 (Reuters) – ASML (ASML.AS), one of the world’s largest suppliers of semiconductor companies, on Wednesday raised its sales outlook for 2021 and announced a new share buyback, so as orders for its equipment have skyrocketed amid a global computer chip shortage.

The Dutch company said demand remained strong as major chipmakers such as TSMC (2330.TW), Samsung (005930.KS) and Intel (INTC.O) rushed to increase production capacity. .

The ASML share price, already up more than 40% since the start of the year, rose 4% in morning trading in Amsterdam.

“Everyone is working extremely hard, us and our suppliers, to actually produce… more machines,” said CEO Peter Wennink. “Everything is driven by what we see today, namely the digital revolution. “

ASML’s market valuation hit an all-time high of over € 240 billion ($ 283 billion) as sustained sales of consumer electronics during the pandemic, storage in China and supply issues hit. created a global semiconductor shortage.

ASML, based in Veldhoven, in the south of the Netherlands, is the leading manufacturer of lithography systems used to produce semiconductors. Each machine can cost up to 200 million euros.

Orders for lithography systems hit a record 8.3 billion euros in the second quarter, boosting an order book 75% larger than at the end of the first quarter.

ASML has announced orders worth 4.9 billion euros for its extreme ultraviolet (EUV) machines used to make advanced chips.

Along with the purchase of ASML’s equipment, chipmakers invested in software to increase the capacity of existing equipment, Wennink said, helping to increase ASML’s gross profit margin to 50, 9%.

“Customers are structurally increasing their capabilities thanks to the digitalization wave,” wrote ING analyst Marc Hesselink in a note. “Overall, there is a very positive tone on demand for 2021 and beyond.”

ASML, which reported second-quarter net profit up 38% to € 1.02 billion ($ 1.2 billion), raised its sales growth outlook for 2021 to 35%.

It has said it will repurchase € 9 billion of its own stock by the end of 2022, replacing its near-completed € 6 billion buyout launched last year.

“I think the future of the industry is bright. Semiconductor manufacturers currently have a combined revenue of around $ 500 billion. It could add up to $ 1 trillion by the end of this year. decade, ”Wennink said.

The bulk of ASML’s sales are to Taiwan and South Korea, with China third and the United States fourth.

($ 1 = € 0.8495)

Reporting by Bart Meijer; Editing by Subhranshu Sahu and Edmund Blair

Our Standards: Thomson Reuters Trust Principles.

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