Finance
ASML order boom reassures investors after DeepSeek sell off
Published by Global Banking and Finance Review
Posted on January 29, 2025
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Published by Global Banking and Finance Review
Posted on January 29, 2025
By Nathan Vifflin and Toby Sterling
EINDHOVEN, Netherlands (Reuters) - Top computer chip equipment maker ASML <ASML.AS> reported fourth-quarter bookings on Wednesday that far exceeded expectations, as a boom in AI drove demand for its most advanced equipment.
The surge in orders may reassure investors in ASML and other chip stocks that AI chip prospects remain healthy, despite a selloff this week sparked by the release of DeepSeek's model, which uses less computing power than its rivals.
ASML shares were 7.5% higher at 695 euros by 1103 GMT, having earlier peaked at 722 euros.
Bookings reached 7.09 billion euros ($7.39 billion), compared with analyst forecasts of 3.99 billion euros, according to Visible Alpha.
"I think if anything, AI has strengthened the opportunity for this business," CEO Christophe Fouquet said at a press conference following earnings.
The launch of DeepSeek has raised questions about whether tech giants, including Google, Microsoft, Meta and Amazon, will continue planned investments in AI chips. ASML's biggest customer, TSMC, manufactures most chips designed by Nvidia and the software firms.
However Fouquet argued that reducing the cost of AI models should lead to a surge in demand as prices fall.
ASML reported fourth quarter net income of 2.7 billion euros on sales of 9.3 billion euros.
The numbers surpassed expectations "from bookings to bottom line," said Michael Roeg, an analyst for Degroof Petercam. He warned that ASML is "too far from the fire" to really be able to answer whether DeepSeek's advent marks a major change in market trends.
ASML reiterated its 2025 sales forecast of 30-35 billion euros, which represents growth of 7-25% from 28.3 billion euros in 2024. While TSMC and memory chip maker SK Hynix are boosting capex to take advantage of the AI boom, Intel and Samsung have struggled.
The United States was ASML's largest market in the fourth quarter with 28% of sales, slightly ahead of China. That reflects TSMC's expansion in Arizona and Intel's purchase of the first two of ASML's new "High NA" EUV tools, which cost around $400 million apiece.
Amid ongoing restrictions on chip equipment exports by the U.S. and Dutch governments on national security grounds, ASML forecasts that China's sales will decrease to 20% of the company's total in 2025, following a major expansion in 2024.
($1 = 0.9579 euros)
(Reporting by Toby Sterling; Editing by Christopher Cushing, Gerry Doyle and Louise Heavens)