The Dutch special machine builder for the chip industry is working at full capacity.
(Photo: via REUTERS)
Munich Orders without end: The Dutch chip supplier ASML can hardly cope with the flood of orders. “The biggest challenge we are currently seeing is that demand is significantly exceeding our capacity,” said CEO Peter Wennink on Thursday. “I have never experienced something like that.”
ASML is benefiting from the massive boom in the semiconductor industry like no other European group. Last year sales shot up by a third to almost 19 billion euros. The profit even rose by almost two thirds to almost six billion euros.
And the upswing is far from over: 2022 will also be a good year, Wennink asserted. He expects sales to increase by 20 percent compared to 2021. Customers urgently need new machines to expand their plants. ASML could sell 40 to 50 percent more equipment if it had the staff and the factories.
Only the investors, they haven’t really believed in the growth story lately. Shares have lost almost a fifth of their value since the fall. However, the plus is still around 40 percent within a year, and most analysts expect a strong price increase in the next twelve months.
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However, the current business is actually in need of explanation. In order to deliver the machines more quickly, the final tests and acceptance would now take place at the customer’s site, explained Wennink. The result: Sales that would normally be posted in the first quarter are now coming later. Therefore, revenues at the beginning of the year would shrink by almost two billion euros compared to the previous quarter. At the end of the year, sales would also be shifted to 2023.
ASML is worth significantly more than SAP
With a market capitalization of around 260 billion euros, ASML is the most valuable tech group in Europe. For comparison: The software manufacturer SAP comes to around 150 billion euros. The market capitalization of the largest German chip company, Infineon, is less than a fifth of ASML.
Only ASML worldwide masters the so-called EUV lithography, the most advanced production process in the chip industry. EUV stands for extreme ultraviolet light, with which the semiconductors are exposed. Only this technology makes it possible to produce chips of the next generation with structure sizes of less than seven nanometers. This means mapping even finer structures on the printed circuit boards and making them more efficient in the smallest of spaces.
The environment for ASML could not be better. The chip manufacturers outdo each other in their expansion plans. The world’s largest contract manufacturer, TSMC, wants to invest a good 40 billion dollars in its plants this year. That is around ten billion more than in 2021. World market leader Intel would like to spend between 25 and 28 billion dollars on factories and machines.
In the European Union, the group is now regarded as the continent’s greatest technological trump card. German suppliers such as Zeiss and Trumpf play a strategically important role here. “In Europe, some companies have outstanding skills that do not exist anywhere else: including technologies that are necessary in the semiconductor production of very small structures,” explains chip expert Sven Baumann from the ZVEI industry association.
“Europe has two jewels,” Intel CEO Pat Gelsinger said last year. “One is ASML, the most advanced lithography company, and the other is Imec, the most advanced semiconductor research company in the world.” Few major chipmakers can afford ASML’s EUV equipment, however. The main buyers are TSMC from Taiwan and Samsung from South Korea.
The proceeds of the chip industry climbed last year by a good quarter to 583.5 billion dollars (513 billion euros), according to market researchers at Gartner. For the current year, the industry expects an increase of almost nine percent.
A fire at ASML’s Berlin factory is worrying the chip supplier’s customers.
(Photo: Bloomberg)
In view of the huge demand, a fire in ASML’s Berlin plant recently caused unrest in the chip industry. The Dutch had to close part of the production with 1200 employees of the former Berlin Glas. ASML took over the high-tech company two years ago. Wennink emphasized on Thursday that the situation was manageable and that the fire would only have a minor impact on EUV business for the year as a whole.
In the long term, there is no need to worry anyway, the manager asserted: “The demand for chips is insatiable – the industry will double in size by the end of the decade.” Currently, ASML has orders for 24 billion euros on the books.
More: In the boom in the chip industry, Samsung is overtaking the market leader Intel