The Sweet ASML Of Success

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What's going on?

Chipmaking equipment maker ASML reported record new orders on Wednesday.

What does this mean?

Some of ASMLs customers have been warning that demand for certain chips has slowed down, but it doesnt seem to have impacted their relationship with the equipment maker just yet. They put in their most new orders ever with ASML last quarter, pushing up its revenue by a better-than-expected 36% from the same time in 2021 (tweet this).

And yet: the companys now expecting that revenue to grow 10% this year, rather than the 20% it previously estimated. This, even though it thinks global trends in carmaking, high-performance computing, and the green energy transition will help prop up demand. Its all down to accounting intricacies, really: ASMLs been skipping quality checks to get orders out to customers in good time, but it cant count them as complete until it finalizes them on site. That means around $2 billion worth of sales probably wont be signed off until 2023.

Why should I care?

The bigger picture: ASML needs time to think.
ASMLs most advanced systems which cost around $160 million each take almost 18 months to build, and demand is still significantly higher than it can keep up with. Thatll only get more severe as chipmakers follow through on their multibillion-dollar expansion plans, which might be why ASML is now thinking up ways to boost supply by 2025. Watch this space: the company said itll update investors later in the year.

Zooming out: Dont forget the shortages.
Carmakers are more dependent than ever on chips and, by extension, chipmaking equipment. So the pandemic-driven disruptions of both are still taking their toll on Volvo, with the Swedish carmaker saying on Wednesday that its being hobbled by production issues. That caused its retail vehicle sales to fall 27% last quarter from the same time the year before, and its predicting that this year’s will be the same as or even slightly lower than that of 2021.

Originally posted as part of the Finimize daily email.

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