ASML, the Dutch manufacturer of semiconductor lithography equipment, has increased its full-year revenue forecast for the second time this year as customers expand capacity to produce artificial intelligence (AI) chips. The CNBC reported that the revision further positions ASML as one of the main beneficiaries of the current technology upcycle.
New guidance and prior figures
The company now expects annual revenue of €43–45 billion and a gross margin of 54–56%. This is a marked increase from its previous guidance of €36–40 billion in revenue and a 51–53% gross margin.
What is driving demand?
ASML had already upgraded its outlook in the previous quarter, mainly due to sustained demand for its most advanced EUV (extreme ultraviolet) lithography systems. These machines are currently the only ones capable of performing the lithography required to produce the most advanced chips used in AI applications. Chipmakers worldwide are expanding capacity to meet rising AI-driven demand, sustaining order flow for ASML's equipment.
Key customer: TSMC
One of ASML's largest customers, Taiwan Semiconductor Manufacturing Company (TSMC), recently reported a 68% increase in June revenue and is reportedly building two new advanced chip packaging plants in the Chia-Yi science park in southern Taiwan. Those moves support continued capacity expansion and equipment demand in the industry.
Analysts' view and risks
UBS analysts believe that factory expansions and AI-driven demand for top-tier chips could produce a particularly strong second half of the year for ASML. Nevertheless, semiconductor stocks have come under pressure as some investors question the sustainability of the large capital expenditure wave driven by AI.
ASML also faces the challenge of tightening export controls on the most advanced chipmaking equipment, which could affect its operations and market access internationally.
Conclusion
The upward revision of ASML's guidance reflects robust demand for AI-capable chips and the ongoing capacity expansions by chipmakers, which sustain equipment orders. However, market skepticism about the longevity of AI-led capex and geopolitical/export restrictions remain material risks for the sector.
This article is not investment advice or a recommendation.
