Semiconductor equipment maker ASML Holding NV (ASML.AS) reported lower-than-expected orders on Wednesday and warned of flat sales next year as customers conserve cash against an uncertain economic backdrop, hitting its shares.
Europe's largest technology firm said the semiconductor industry was probably near a trough but that "customers continue to be uncertain about the shape of the demand recovery ... we therefore expect 2024 to be a transition year".
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 Chief Financial Officer Roger Dassen.
ASML shares erased some early losses and were 1.9% lower at 562 euros at 0725 GMT in Amsterdam.
The company reported net profit of 1.9 billion euros ($2.01 billion) for the three months ended Sept. 30, in line with analysts' expectations.
Net bookings were 2.6 billion euros, compared with third quarter sales of 6.7 billion euros.
Analyst Jos Versteeg of InsingerGilissen said ASML's overall outlook remains strong.
"This is a profit warning, and we're not used to that coming from ASML," after years of rapid growth, he said.
He added that the company is affected by timing issues, including completion of a big new Taiwan Semiconductor Manufacturing Co. (2330.TW) (TSMC) plant in Arizona, as well as general caution by chipmakers as the U.S. and Europe are heading into a slowdown, or recession.
But the chip market will recover and ASML's "fundamentals are still good, very good," he said.
ASML dominates the market for lithography systems, machines costing hundreds of millions of euros each that are used by chip makers such as TSMC, Samsung and Intel to help create the tiny circuitry of chips.
Dassen 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 United States and Europe.
Dassen said the company did not expect any financial impact from an updated U.S. policy announced on 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.
($1 = 0.9446 euros)
