ASML, the Dutch maker of semiconductor lithography equipment, delivered third-quarter earnings above expectations on margins, with fourth-quarter guidance coming in ahead of forecasts as the company flagged surging demand it may struggle to meet.
Net sales for the three months to September came in at €11.6 billion, broadly in line with consensus, but a gross margin of 57.5% topped the 56% expected by analysts, pushing operating profit 5% above consensus.
Fourth-quarter net sales guidance of €14.2 billion to €15.2 billion compared with consensus of €14.3 billion, implying a 7% beat at the midpoint on operating profit.
China contribution
China continued to be a significant contributor, with system sales up 110% quarter-on-quarter, although they fell 17% year-on-year, representing 23% of Q3 product sales.
EUV system sales, relating to the company's most advanced extreme ultraviolet lithography machines, reached €4.1 billion in the quarter, up 94% year-on-year, though 7% below consensus.
The most significant disclosure was ASML's warning that its planned 30% capacity increase for Low-NA EUV and immersion DUV machines in 2027 and 2028 will not be sufficient to meet customer demand.
Management said it had received "a lot of order intake for 2028" and noted strong interest in placing orders for 2029 and in some cases 2030.
Conviction 'buy'
Analysts at UBS, which rates ASML a Conviction Buy with a price target of €2,350, said the comments point to a substantial backlog being disclosed next quarter, well above current consensus.
The bank expects 5% to 10% upgrades to consensus earnings per share forecasts for 2027 and 2028 on the back of the results and updated guidance.
ASML shares were trading at €1,509.60 ahead of the results, against a 52-week high of €1,721.40.
