Semiconductor equipment maker ASML Holding NV on Wednesday warned of flat sales in 2024 as customers conserve cash, after reporting third-quarter earnings in line with analysts' expectations.
Europe's largest technology firm reported net profit of 1.9 billion euros ($2.01 billion) for the three months ended Sept. 30, compared with 1.7 billion euros last year. This beat average analyst estimates of 1.81 billion euros, according to LSEG data.
Analysts expect 2024 sales increasing to 28.5 billion euros, from around 27.2 billion euros this year.
"The semiconductor industry is currently working through the bottom of the cycle and our customers expect the inflection point to be visible by the end of this year," CEO Peter Wennink said in a statement.
But "customers continue to be uncertain about the shape of the demand recovery ... we therefore expect 2024 to be a transition year."
ASML dominates the market for lithography systems, machines that each cost hundreds of millions of euros are used by chip makers such as TSMC, Samsung and Intel to help create the tiny circuitry of chips.
Customers are "being very cautious with cash, being very cautious with capex, and as a result of that, they're also very cautious with putting in orders", said CFO Roger Dassen.
He said ASML still had an order backlog of 35 billion euros and a strong 2025 would follow an uncertain 2024, given its customers' expansion plans in Asia, the U.S. and Europe.
Sales were up 15% to 6.7 billion euros in the third quarter, also in line with analyst expectations.
Dassen said the company did not expect any financial impact from an updated U.S. policy announced Tuesday restricting sales of semiconductor equipment to China.
In recent years, China has been ASML's third-largest market after Taiwan and South Korea, but it was the biggest in the third quarter, with 46% of sales.
Chinese customers were buying relatively older machines and ASML had warned them they would likely not receive licences from the Dutch government to buy one of its more advanced product lines starting in January.
This article was written by Toby Sterling from Reuters and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.