AI<\/a> chips, reports quarterly earnings on Wednesday looking to justify its chunky valuation and demonstrate how it will contend with U.S. moves to block \u200cexports to China. <\/p>\nThe Netherlands-based business is Europe’s most valuable listed company with a market capitalisation of \u20ac610 billion ($696 billion) after the AI \u200cboom helped to lift its share price by nearly 70% this year as memory chip makers such as SK Hynix, Samsung and Micron rush to add capacity. <\/p>\n
Biggest customer TSMC, which makes \u200bNvidia’s chips, is also expanding while Intel’s recovery and Elon Musk’s TeraFab plans could add further demand. <\/p>\n
EXPORT CONTROLS CLOUDING OUTLOOK <\/p>\n
Clouding the outlook, however, is a proposed U.S. law requiring U.S. allies to align with export controls to curb China’s ability to make advanced chips, with ASML named in the legislation. <\/p>\n
The company has denied selling its most advanced EUV tools to China, which is forecast to account for up to 20% of ASML’s sales this year through legal purchases of \u200cless-advanced DUV tools to make chips for automotive, \u2060industrial and electronic products. <\/p>\n
ASML is forecast to report an 8.8% rise in second-quarter net profit to \u20ac2.61 billion on revenue up 14% at \u20ac8.8 billion, according to LSEG estimates, with analysts looking for an increase to the company’s full-year revenue forecast \u2060of between \u20ac36 billion and \u20ac40 billion. <\/p>\n
“We expect ASML to have a beat-and-raise earnings report,” said Mehdi Hosseini, analyst at broker Susquehanna, adding that all of ASML’s capacity to the end of 2027 may already be booked. <\/p>\n
Morningstar’s Javier Correonero said that ASML’s 2030 sales target of at least \u20ac44 billion now looks overly conservative. “It’s very reasonable to assume \u200bthis \u200bguidance is outdated,” he said. “I forecast \u20ac60 billion in 2030 sales.” <\/p>\n
‘CREATIVE WAYS’ TO MEET CUSTOMER \u200bDEMAND <\/p>\n
ASML is the only maker of EUV lithography systems, \u200cthe huge $300 million machines needed to produce the tiny circuitry on cutting-edge chips. Each takes about a year to build, one of the factors that limit how quickly AI infrastructure can expand. <\/p>\n
Chief Executive Christophe Fouquet said in April that ASML was doing everything possible to avoid becoming an industry bottleneck, as happened during the COVID-19 pandemic. <\/p>\n
ASML, which aims to ship 60 EUV tools this year and 80 next year, has said it could theoretically ship up to 90 without adding physical capacity, though JPMorgan analysts have said they believe it could make as many as 110. <\/p>\n
“Beyond the 90 we are looking \u200cat creative ways to help customers,” ASML said in a statement to Reuters. Options \u200binclude upgrades to older tools, faster machine assembly and quicker installation. <\/p>\n
ASML says it has also \u200bsecured extra supplies of parts that take a long time to \u200bproduce, including lenses and mirrors from German supplier Zeiss and high-power lasers from Germany’s Trumpf. <\/p>\n
“We are fully prepared to \u200cmeet ASML’s EUV demand over the next three years,” said \u200bTrumpf spokesperson Manuel Thoma. <\/p>\n
Zeiss declined to comment \u200bon capacity, though the company has been expanding DUV and EUV optics operations. <\/p>\n
MORE VALUATION UPSIDE OR HITTING A CEILING? <\/p>\n
Some analysts cautioned that ASML’s valuation looks stretched, with the stock trading at 49 times estimated 2027 earnings. <\/p>\n
“We believe much of the upside is reflected in the \u200bcurrent price and therefore maintain our ‘hold’ recommendation,” said KBC \u200canalyst Thomas Couvreur. <\/p>\n
Others said there is still room for a positive surprise because ASML has underperformed the benchmark Philadelphia Semiconductor Index \u200bso far this year. <\/p>\n
“Strong results combined with further capacity expansion could support a catch-up,” said ING analyst Marc Hesselink. <\/p>\n
($1 = 0.8769 \u200beuros) <\/p>\n
(Reporting by Toby Sterling and Nathan VifflinEditing by Adam Jourdan and David Goodman) <\/p>\n","protected":false},"excerpt":{"rendered":"By Toby Sterling and Nathan Vifflin AMSTERDAM, July 14 (Reuters) – ASML, the biggest supplier of equipment used…\n","protected":false},"author":2,"featured_media":540480,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[3186,114,1657,99586,85,46],"class_list":["post-540479","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-asml","tag-business","tag-china","tag-euv-lithography","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/540479","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=540479"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/540479\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/540480"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=540479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=540479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=540479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}