ASML Order Book Soars on AI Chip Demand, Booming Despite China Concerns

ASML, the world’s leading supplier of equipment to chipmakers, is poised for a strong second quarter, driven by the burgeoning demand for AI chips. The company is expected to report a surge in new orders, with analysts predicting an order book close to €5 billion, exceeding consensus estimates. This surge is fueled by increased purchases from major players like TSMC, Nvidia, and Apple, who are looking to expand their capacity to meet the growing demand for AI chips.

ASML’s dominance in extreme ultraviolet (EUV) lithography systems, essential for producing advanced chips, is a key factor in this positive outlook. These systems are critical for manufacturing the most complex chips used in AI and smartphones. The company’s new CEO, Christophe Fouquet, will be leading ASML through a period of transition in 2024 before expecting a strong rebound in 2025, driven by continued demand for its advanced tools.

However, the report also highlights concerns about China’s increasing purchases of older generation chipmaking equipment, potentially impacting market share for non-Chinese firms. This has prompted an investigation by the European Commission into potential market distortions caused by Chinese state subsidies. Despite these concerns, ASML emphasizes the importance of older chip technologies and China’s role in supplying them, citing the shortages experienced during the COVID-19 pandemic.

The upcoming earnings announcement will provide further insights into ASML’s performance and its future prospects in the face of these challenges. Investors will be closely watching to see how the company is navigating the complex geopolitical landscape surrounding the chip industry and managing the delicate balance between meeting the needs of its diverse customer base while mitigating potential risks from China’s growing chipmaking ambitions.