ASML

ASML

10 January 2020Reading time: 3 minutes

On October 16th ASML published their third quarter results. This showed that the semiconductor manufacturer from Veldhoven has again achieved good growth figures. The net revenue almost reached 3 billion euro, which is an increase of 7,6 percent on an annual basis. The gross margin came at 43,7 percent, which resulted in a net income of 627 million euro. With these results ASML performed even better than the second quarter of this year. The gross margin in the second quarter ended at 43 percent with a net income of 476 million euro. For the fourth quarter of 2019 ASML expects a revenue of 3,9 billion euro and a gross margin between 48 and 49 percent. The final fourth quarter results will be published on January 22th.

The Semiconductor Industry Association (SIA) claimed early December that the global semiconductor sales reached a total of 36,6 billion dollar. This comes down to an increase of 2,9 percent on an monthly basis, but on an annual basis the total sales figures decreased with 13,1 percent. The World Semiconductor Trade Statistics (WSTS) expects global sales to fall by 12.8 percent throughout 2019, followed by an increase of 5,9 percent in 2020 and 6,3 percent in 2021.

The SIA agrees with this and claims that after the record year of 2018, the sales have somewhat plummeted in 2019 but that the sales figures of October are hopeful. The organisation also stated that the semiconductor industry mainly depends on three important factors. First off by the ongoing digitalization of our daily life’s, which makes smartphones and computer more and more relevant. Second factor is the automatization and artificial intelligence (AI) for appliances. Third important factor is the automatization of the automotive industry, in which technological developments follow in rapid order.

Although the SIA expects that these three factors will remain important for the semiconductor industry in 2020, they also point out that several indicators show that the best days for the industry have passed. This is partly due to the failing global automotive industry and geopolitical tensions between China and the United States. However, according to SIA, opportunities for next year lies with the introduction of the newest 5G network, which could massively boost smartphone productions.

In 2018 ASML made great progress in China and even achieved an annual revenue of 1,8 billion euro in this country. Early 2019 however, there was a lot of commotion due to a spying scandal which involved a Chinese company who would have stolen sensitive information from ASML. There are even rumours that the Chinese government would be behind this scandal, because China has ambitions to gain a larger market share in the global chip manufacturing industry.

It was also recently announced that the company from Veldhoven, had to stop the delivery of a EUV-chip machine to a Chinese chip manufacturer. The Dutch government did not prolonged an important license that is necessary for the delivery. The EUV technology form ASML falls under the Wassenaar treaty and reportedly the Dutch government would have suspended the license under pressure of the United States. The US may want to slow down the developments of the Chinese chip manufacturers. At this moment of writing it is still uncertain if and when ASML are yet to deliver the EUV-chip machine to China.

Throughout 2019 ASML is the best performing stock within the AEX index. On an annual basis the stock price gained 93,3 percent and is now (December 27th, 2019) 265,65 euro. ASML has adjusted its share buyback program for 2019 and has announced an interim dividend for 1,05 euro per share.

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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29/03/2020 20:21:22