Paul van Gerven
18 October

ASML’s growth streak falters, though the company anticipates a hectic upswing in 2025.

ASML’s seemingly unstoppable growth is – temporarily – grinding to a halt. While the chip equipment maker still expects to grow 30 percent this year, it doesn’t think it can do better than matching 2023’s revenue next year. “We expect 2024 to be a transition year. But we also look at 2024 as an important year to prepare for the significant growth that we expect for 2025,” comments CEO Peter Wennink.

The semiconductor industry has been in a slump for more than a year. Inflation and macroeconomic uncertainty have been holding back recovery, although customers are telling Wennink that the industry is now closing in on an inflection point. However, as uncertainty about the shape and slope of demand recovery prevails, chipmakers continue pushing out equipment purchases. Geopolitical tensions – the US announced new export restrictions a day before ASML published its Q3 results – are contributing to the market’s skepticism as well.

Until recently, ASML has kept a relatively upbeat attitude about the downcycle, pointing to a record order book that keeps the company firing on all cylinders while working on significant capacity expansions. As the malaise drags on, perhaps longer than expected, it’s clear that the firm isn’t immune to the slowdown after all.

ASML posted third-quarter sales of 6.7 billion euros, some 200 million euros less than the previous quarter. Compared to last year, order flow has been significantly down all year. Q3 marks a preliminary low point, with bookings coming in at 2.6 billion euros, compared to a record of almost 9 billion euros one year ago. The order book is still well-filled at just under 40 billion euros.


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Very, very strong

“All in all, on the macro front, it’s quite dynamic and quite challenging,” CFO Roger Dassen says in a video interview published alongside the Q3 results. Zooming in on the semiconductor industry, inventory positions are a mixed bag. Downstream, at end customers, “we do believe that the inventory situation is starting to become more normalized. Upstream, the inventory situation still needs to further normalize.”

“I think as far as utilization of our tools is concerned, the progress that we started to see also in the previous quarter on the utilization of logic, we do see that progress is there. So we do see that on logic, utilization is starting to improve. I would say in memory, quite frankly, I think we still need to see our customers turn the corner on the utilization front.”

Meanwhile, chipmakers continue preparing to ramp up production. “We see quite a few fabs that are in the process of being built and we do expect quite some fab openings in the 2024 and 2025 timeframe. Obviously, that will require quite some tools.” With “very, very strong” secular growth drivers still securely in place, ASML expects to find itself in the midst of an uptick in the semiconductor cycle somewhere in the 2025 timeframe. The company is therefore not slowing down capacity expansion operations, a spokesperson confirms to Bits&Chips. “It will be challenging to manage that growth, so we need to prepare.”


China is ahead in the cycle, with ASML’s shipments to the Middle Kingdom making up 46 percent of total shipments in Q3. A lot of these orders for mid-critical and mature nodes stem from 2022 and before, Dassen notes. As customers from other regions ask for their shipments to be delayed, Chinese chipmakers are picking up the slack.

Yesterday, US authorities announced an update on export restrictions rules, including additional curbs for equipment makers. ASML says it’s still studying the new rules but expects them to impact “the regional split of systems sales” rather than overall systems sales in the medium to long term. “We don’t expect these measures to have a material impact on our financial outlook for 2023 and for our longer-term scenarios for 2025 and 2030.”

Main picture credit: ASML