Finance
ASML to report Q4 earnings amid hopes and fears over DeepSeek, Trump
Published by Global Banking and Finance Review
Posted on January 28, 2025
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Published by Global Banking and Finance Review
Posted on January 28, 2025
By Nathan Vifflin and Toby Sterling
AMSTERDAM (Reuters) - Investors will seek reassurance that ASML's AI-dependent growth outlook for 2025 is secure despite a selloff sparked by China's DeepSeek, as the biggest supplier of equipment used to make computer chips ASML reports earnings on Wednesday.
Uncertainty over whether U.S. President Donald Trump may further restrict exports of ASML's older DUV product lines to China also hangs over the company. However, analysts said the focus at the company's fourth-quarter earnings will be on orders for its advanced EUV tools, already restricted in China, which are essential for creating the circuitry of AI chips.
"Investors want to get comfortable that ASML's bookings support 2025 guidance, and that they are beginning to build the backlog for growth into 2026," said Bernstein analyst Sara Russo.
DeepSeek spooked markets with an AI model that uses a fraction of rivals' computing power, calling into question whether tech giants including Google, Microsoft, Meta and Amazon are overspending on AI chips. ASML's top customer TSMC manufactures most chips designed by Nvidia and the software firms. ASML shares closed 7% lower on Monday.
ASML downgraded forecasts in October, saying industrial chips remain in a slump. But it still sees 2025 sales rising on to 30-35 billion euros, up from 28 billion euros in 2024, as customers expand capacity for AI. Analysts expect bookings of around 3.5 billion euros ($4.2 billion) in the fourth quarter.
Because other ASML customers including Intel and Samsungwere already cutting spending plans, TSMC and SK Hynix, which makes "high bandwidth" memory chips required for AI, must make up the difference.
On Jan. 16, TSMC said it would bump up capex spending by 40% to $38-42 billion in 2025, while Hynix is increasing spending modestly.
Industry group SEMI forecasts chip equipment sales will grow 7% to $121 billion in 2025 - ASML has roughly 25% market share.
While Trump's chip policy is an unknown, ASML has forecast China sales will fall to 20% of its total in 2025 due to U.S.-led restrictions, down from more than 40% in 2024.
(Reporting by Toby Sterling and Nathan Vifflin; editing by David Evans)