“We are working very, very hard to address all the supply chain issues that everyone is dealing with,” ASML Chief Financial Officer Roger Dassen said in a statement.

Source: Content is integrated by Semiconductor Industry Observer (ID: icbank) from Nikkei and Reuters, etc. Thank you.

According to Nikkei , Europe's largest semiconductor production equipment manufacturer ASML said on Wednesday that "no signs" indicate a slowdown in demand as the Dutch supplier is struggling to cope with its own supply restrictions to provide enough equipment for global chip manufacturers.

ASML CEO Peter Wennink said even more bluntly. "The company's data suggests that semiconductor manufacturing capacity will remain severely short of this year and next year."

Wennink told investors on the earnings call that despite the uncertainty created by the current macroeconomic environment, ASML continues to see customers in all segments “unprecedented” for advanced and mature chip manufacturing technologies.

From the Reuters report, we saw that Peter Wennink said in response to the analyst question: "At present, we have not seen any signs of any weakenING in our customer base. Zero). "And even if demand weakens, there is a big gap between demand and our production capacity ," Wennink continued.

Wennink also refuted the view that the industry may be idle, saying that besides the waiting period for cutting-edge products for more than one year, almost every customer that the company once sold machines to is currently trying to acquire older chip manufacturing equipment. (Original words: almost every customer we have ever sold a machine to is currently trying to acquire older chip manufacturing equipment).

ASML CEO made the comments after many semiconductor device manufacturers warned customers that the delivery time of chip production tools has grown to a year and a half or more. Tool manufacturers are suffering from their own parts shortages.

Wennink also tells an anecdote of an unnamed large company that said it was buying old washing machines to recycle the chips in it, adding that the story is not unique.

Wennink says that due to capacity constraints, ASML can only meet about 60% of its demand for deep ultraviolet lithography (DUV) systems, one of the most common tools for etching chip circuits.

“If we can do 60%, I’ll be happy this year,” he said.

"If you come in now and want a DUV tool, [it will come in the second half of next year]... Now the lead time of purchase orders is totally irrelevant," Wennink said. "This is the capacity lead time... [meaning] you need to build capacity to get more machines."

He also noted that ASML machines are utilizing at an all-time high, which shows that customers buy more not for inventory, but because they can't keep up with demand.

large DUV orders, ASML sold 62 lithography machines in the first quarter

According to Reuters, ASML, the main supplier of chip manufacturers, released the company's first quarter sales data on Wednesday. Data shows that in the first quarter of 2022, ASML achieved net sales of 3.5 billion euros, gross profit margin of 49.0%, net profit of 695 million euros, and new orders amounted to 7 billion euros. ASML expects net sales to be approximately 5.1 billion to 5.3 billion euros in the second quarter of 2022, and its gross profit margin is approximately 49% to 50%.

From the introduction of ASML President and CEO Peter Wennink, we can tell that ASML's new orders amounted to 7 billion euros in the first quarter, of which 2.5 billion euros came from 0.33 NA and 0.55 NA EUV system orders and a large number of DUV orders, which reflects the strong market demand for the sustainability of advanced and mature nodes.

. According to the company's demonstration data, as shown in the figure below: If we look at it technically, ArFi system sales contributed the largest revenue, while EUV lithography system contributed 26% of revenue. Followed by KrF, Measurement and Testing, ArF Dry, and i-Line. If we look at terminal applications, the contribution from logic and storage is 50% respectively. Compared with the data from the previous quarter, sales from storage have increased significantly. From the perspective of regional contribution, mainland China is the largest buyer, contributing 34% of ASML's revenue, South Korea contributed 29% of it, Taiwan, China contributed 22% and Japan contributed 7%.It is worth mentioning that the United States, which has recently made massive development of semiconductor manufacturing, contributed 6% of its revenue. Compared with the previous quarter, orders from the mainland increased significantly, orders from Taiwan, China and the United States also appeared on this lithography machine purchase list.

From the figure below, we can clearly see that the revenue contributed by storage is growing rapidly. This may be driven by DRAM and NAND Flash's move towards EUV manufacturing, and international majors are stepping up production expansion.

From the figure below, we can see orders brought from different markets and orders for new and old lithography systems.

Bloomberg also sorted out the focus of ASML's financial report meeting. As follows:

1►

In the first quarter, ASML shipped 9 latest EUV machines that could etch smaller circuits while increasing capacity and speed.

2►

ASML said on Wednesday that second-quarter sales were expected to be €5.1 billion (US$5.52 billion) to €5.3 billion, while Bloomberg analyst survey estimated €5.86 billion.

3►

ASML maintains 20% sales growth this year and the production capacity of 55 EUV units

4►

Dassen said that ASML's EUV capacity has doubled compared to 2020. “So by 2025, there will be more than 70 EUV systems.”

5►

“Talking about the activity part we discussed at the time, we said we expected the gross margin of installing the underlying revenue business to be a little lower,” said Dasen. “Because we had a very, very high-level software business last year, we expected it to be a little lower this year.”

6►

Analyst Marc Hesselink, an analyst at Dutch International (ING), said. “With the support of very sufficient orders and capacity improvements, the capacity in 2023 has been well formed.” He said he doesn't think the overall situation will change and "there is a lot of demand in the next few years."

7►

Since the beginning of the year, ASML share price has fallen by about 22%, consistent with the 23% decline of Stoke's European Technology Index.

ASML says that in the face of global semiconductor shortages, customers are competing to increase production capacity, so bookings remain strong, and by market capitalization, ASML is the largest technology company in Europe with a market capitalization of €226 billion.

"This quarter, we received multiple orders for High-NA EXE:5200 system (EUV 0.55 NA) from logic chip and memory chip customers." ASML analysis said. At the same time, in the application business, ASML also delivered the first eScan460 system, our next generation single electron beam detection device. Compared with the eScan430, the eScan460 has higher resolution and a 50% improvement in detection efficiency.

"The strong demand for our system has exceeded current capacity as always. To meet the needs of our customers, we provide high-productivity upgrade solutions and continue to reduce plant cycles through rapid shipment processes. In addition, we are working with our supply chain partners to expand capacity. Taking into account market demand and our plan to increase capacity, we will re-evaluate the company's expected 2025 and subsequent growth opportunities, and plan to announce the latest progress in the second half of this year. We expect the company's net sales in the second quarter of 2022 to be between 5.1 billion and 5.3 billion euros, with a gross profit margin of about 49% to 50%. The estimated R&D cost is approximately 790 million euros and sales and administrative expenses are approximately 220 million euros. The expected revenue growth for the full year of 2022 is still around 20%. " Peter Wennink further pointed out.

Reuters pointed out that ASML expects to catch up with the current backlog of orders sometime in 2024, and they are also taking steps to reduce lead times and increase productivity of their tools, even as it tries to expand production. “We are working very, very hard to address all the supply chain issues that everyone is dealing with,” ASML Chief Financial Officer Roger Dassen said in a statement.

ASML reportedly excluded equipment worth approximately 2 billion euros in its first quarter sales, as customers requested shipments immediately before full testing.Therefore, these delivery cannot be recorded as sales, but ASML is expected to recognize this revenue in the coming quarters. Dassen also noted that the company has received "multiple orders" for its next generation "EUV High NA" machine, which is still under development. He also added that for the first time, memory chip manufacturers appeared among EUV High NA's customers.

"In view of demand and our plans to increase capacity, we expect to re-examine the scenario and future growth opportunities in 2025. We plan to release an update in the second half of the year," Peter Wennink concluded.

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