ASML Earnings: Investors Seek Reassurance Amidst China's AI Chip Ambitions
Ahead of ASML's (ASML) earnings report on Wednesday, investors seek assurance on the company's AI-driven growth outlook for 2025. The selloff triggered by China's DeepSeek raises concerns about the demand for AI chips and ASML's exposure to this market.
Uncertainty persists over potential further restrictions on exports of ASML's DUV product lines to China. However, analysts anticipate the focus to remain on orders for advanced EUV tools, crucial for AI chip manufacturing.
"Investors are looking for confirmation of ASML's bookings supporting 2025 guidance and the building of a backlog for continued growth into 2026," said Bernstein analyst Sara Russo.
DeepSeek's impressive AI model has questioned the spending of tech giants on AI chips, impacting ASML's top customer, TSMC, which produces chips for Nvidia and software firms. ASML's shares declined by 7% on Monday.
Despite downgrading its forecasts in October, ASML expects sales to increase to €30-35 billion in 2025, driven by AI-related capacity expansion. Analysts anticipate bookings of around €3.5 billion for the fourth quarter.
To make up for reduced spending by other customers like Intel and Samsung, ASML relies on TSMC and SK Hynix to drive demand. TSMC recently announced a 40% increase in capex spending, while Hynix is also increasing its investment.
According to industry group SEMI, chip equipment sales are projected to grow 7% to $121 billion in 2025, with ASML holding a market share of approximately 25%.
While the impact of Trump's chip policy remains uncertain, ASML forecasts a decline in China sales to 20% of its total in 2025 due to US-led restrictions.