Strong Q4 Boosts Net Bookings but Annual Figures Decline
ASML, the Dutch manufacturer of chip-making equipment, reported a significant quarter-over-quarter surge in net bookings for Q4 2024. Bookings increased by 169 percent from €2.6 billion ($2.8 billion) in Q3 to €7.1 billion ($7.3 billion) in Q4. Of this total, €3 billion ($3.1 billion) were attributed to Extreme Ultraviolet (EUV) lithography systems, nearly doubling Q3’s EUV bookings.
However, the company experienced a year-over-year (YoY) decline in net bookings, dropping from €20 billion ($20.8 billion) in FY23 to €18.9 billion ($19.6 billion) in FY24. This marks a challenging period for ASML despite the strong final quarter.
Q4 and Annual Net Sales Show Moderate Growth
Net sales for Q4 2024 reached €9.3 billion ($9.7 billion), driving ASML’s total annual net sales to €28.3 billion ($29.4 billion), a 2.5 percent YoY increase. CEO Christophe Fouque attributed the strong Q4 performance to additional upgrades and revenue from two High NA EUV systems. A third High NA EUV system was shipped during the quarter, though revenue recognition was deferred.
Increased R&D Investment Reflects Long-Term Strategy
ASML invested €4.3 billion ($4.5 billion) in research and development during 2024, up from €4 billion ($4.2 billion) in FY23. These investments reflect the company’s commitment to advancing semiconductor technology, including its leadership in EUV lithography—essential for producing advanced 3nm and 5nm chips.
Lithography System Sales: Mixed Results in New and Used Units
ASML sold 119 new lithography systems and 13 used systems in Q4 2024. This marks an increase of 13 new units and 3 used units compared to Q3. However, annual sales of new systems dropped from 421 in FY23 to 380 in FY24, while used system sales rose by 10 units year-over-year.
FY25 Outlook: Opportunities and Risks in AI-Driven Growth
Looking ahead, ASML projects Q1 2025 net sales between €7.5 billion ($7.8 billion) and €8 billion ($8.3 billion). For the full year, the company expects total net sales to range from €30 billion ($31 billion) to €35 billion ($36 billion). Fouque emphasized the role of artificial intelligence (AI) as a key growth driver, noting its potential to increase chip demand. However, he also acknowledged market shifts that create uneven benefits among customers, posing both opportunities and risks.
Impact of Low-Cost AI Development
ASML’s shares recently dropped 9.7 percent in pre-market trading following claims by Chinese startup DeepSeek that it trained its R1 large language model (LLM) at a significantly lower cost than U.S.-based competitors. Despite this, Fouque expressed optimism, stating that lower AI costs could lead to broader applications and higher long-term chip demand.
FAQ: Understanding ASML’s Performance and Outlook
What are EUV lithography systems, and why are they important?
EUV lithography systems use extreme ultraviolet light to etch intricate patterns onto silicon wafers, enabling the production of advanced semiconductor chips, such as 3nm and 5nm nodes.
Why did ASML’s annual net bookings decline in 2024?
The decline in annual net bookings from €20 billion in FY23 to €18.9 billion in FY24 reflects shifting market dynamics, including uneven benefits among customers and potential delays in purchasing decisions.
How did R&D expenses impact ASML’s financial performance?
ASML increased its R&D spending to €4.3 billion in 2024, up from €4 billion in 2023. This investment underscores the company’s focus on maintaining its technological edge in advanced lithography systems.
What role does AI play in ASML’s future growth?
AI is driving demand for advanced chips, creating opportunities for ASML. However, uneven market benefits among customers and cost pressures may influence future revenue.
How does ASML’s FY25 revenue projection compare to FY24?
ASML projects total net sales between €30 billion and €35 billion for FY25, compared to €28.3 billion in FY24, signaling anticipated growth driven by AI and advanced chip demand.
