ASML Sees Rising Sales, Margin Pressure on New Technology

Updated on
  • Dutch company trying to fuel demand for new EUV technology
  • Demand picking up as customers ramp up chip production

ASML Holding NV, Europe’s largest semiconductor-equipment maker, forecast rising sales for this quarter, while predicting pressure on earnings as the introduction of new technology boosts costs.

Second-quarter revenue will be about 1.7 billion euros ($1.9 billion), the Veldhoven, Netherlands-based company said in a statement Wednesday. Analysts had predicted 1.65 billion euros on average. Gross margin will be about 42 percent of sales, ASML said, a prediction trailing estimates amid investments in new chip-making technology.

ASML is trying to convince clients such as Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. to upgrade their machinery even as demand for chips used in smartphones, personal computers and tablets slows. The Dutch company is touting extreme ultraviolet lithography systems, which can produce smaller chips while increasing capacity and speed.

Shares of ASML rose 1 percent to 89.13 euros at 9:44 a.m. in Amsterdam. They had advanced 6.9 percent this year through Tuesday, after gaining more than 30 percent in each of the past three years.

ASML said its second-quarter gross margin will have a negative 5 percentage-point impact from costs resulting from it delivering two EUV machines. It can only record a part of the revenue expected from the machines, though it needs to book their full cost. Analysts had predicted gross margin of 46.3 percent for this quarter on average.

Net bookings in the first quarter fell 29 percent to 835 million euros from the previous quarter.

“The net bookings momentum was fairly weak, especially from the memory segment,” Hans Slob, an analyst at Rabobank, said by phone. “It makes one wonder whether they’ll be able to meet market expectations for this year’s sales.”

(Updates with analyst's comment in seventh paragraph.)
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