ASML loses $75.7 billion market cap from updated sales projections, likely due to lower demand from China and delayed Intel fab

ASML
(Image credit: ASML)

On Tuesday, ASML accidentally published its third quarter results ahead of schedule and provided an outlook for 2025. While the company expects strong 2024 sales, as chipmakers from all around the world order plenty of advanced tools, its 2025 outlook is lowered due to slower-than-expected market recovery, geopolitical uncertainty, and potential additional regulations for exports of fab tools to China. As a result, the company's market cap has dropped nearly $75.7 billion in a couple of days.

Strong 2024, but projects for 2025 are €5 billion below expectations

In the third quarter of 2024, ASML's revenue topped €7.5 billion, surpassing expectations thanks to strong DUV equipment sales and a higher-than-anticipated Installed Base Management revenue of €1.54 billion. Although net bookings reached €2.6 billion — significantly below the anticipated €5.6 billion, including €1.4 billion from EUV systems, they fell short of projections, indicating market pressures. The company finished the quarter with a backlog exceeding €36 billion.  

For the fourth quarter, ASML expects sales to rise significantly to between €8.8 billion and €9.2 billion, driven by a forecasted increase in Installed Base Management revenue to €1.9 billion from EUV performance and productivity upgrades. The company projects its 2024 revenue to be around €28 billion, which is consistent with previous guidance, for a slight overall decline from 2023. However, ASML's updated 2025 sales projection is now between €30 billion and €35 billion, which is at the lower end of ASML's earlier estimates when the company expected revenue between €35 billion and €40 billion.

China, Intel, not only

There are several reasons ASML is lowering its revenue guidance, but the main two are obvious: stricter regulations on tools that can be shipped to China, and Intel's cut-down expansion plans — particularly the delay of its Fab 29 in Germany to 2029 – 2030. We'll also note the delays of Samsung Foundry's fab in the U.S., though the change of Intel's plans probably hurts ASML more. Limited capacity additions to 3D NAND DRAM are playing a role as well. 

In recent quarters China has accelerated building out and equipping dozens of new fabs, so China-based companies required hundreds of new lithography tools — and ASML landed these orders. Thus, China accounted for roughly half of the company's revenue in the recent quarters. But as China slows down purchases of older tools and the U.S. and its allies prepare to implement stricter regulations for exporting semiconductor tools to China, ASML forecasts that its business with Chinese entities will account for just 20% of its total revenue in 2025. 

ASML CFO Roger Dassen indicated that this shift is a return to more historically normal levels. 

"I think we all read newspapers, right," Dassen said. "We all see that there is speculation around export controls. So, that is a driver for us to take a more cautious view on the China sales. So, with that combined, we stated that we believe the China sales for next year are going to go to, let us say, 20% of our expected sales level for next year." 

ASML didn't mention Intel specifically, but it did mention push outs of certain fabs.  

"Regarding Logic, the competitive foundry dynamics have resulted in a slower ramp of new nodes at certain customers, leading to several fab push outs and resulting changes in litho demand timing, in particular EUV," said ASML CEO Christophe Fouquet. "In Memory, we see limited capacity additions, with the focus still on technology transitions supporting the HBM and DDR5 AI-related demand." 

When asked specifically whether lower sales are the result of some of ASML's customers struggling with process technologies and failing to attract customers to justify building new fabs, Fouquet confirmed this was a general problem — but, again, did not mention Intel specifically. 

Analysts expressed disappointment with ASML's revised guidance, mentioning the weaker-than-expected net bookings and the lower end of the 2025 sales outlook. They noted that the subdued projections suggest a slower recovery in the semiconductor industry, with ongoing cyclical challenges and specific customer issues affecting future growth. 

Despite concerns about the company's outlook, some market analysts emphasized that the ASML's revised expectations do not indicate any major shift in the anticipated growth for AI-related demand — suggesting that the long-term AI growth remains intact.

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Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • thestryker
    I imagine the Intel delays in Ohio are more of an issue than the European ones as there's no guarantee how much EUV as opposed to High-NA would be installed in Germany. Even though the newest EUV machines process wafers at a higher rate than existing Samsung and TSMC may also not be upgrading as much. I know TSMC currently has a packaging bottleneck and Samsung has a fab utilization problem.

    No delays on the High-NA side which is probably why news of Intel's second installation dropped yesterday to give some positivity to ASML's financials. At the same time Intel seems to be the only early buy in which can probably sustain through 2025 due to low manufacturing rate but even assuming the Germany fabs go ahead as scheduled and are to be filled with High-NA that's a big gap. Samsung given its fab issues likely wouldn't be buying much beyond development until things stabilize some and TSMC seems content waiting for beyond 1.6.

    I do find it interesting that ASML is effectively being punished for government policy decisions and customer delays only now that they've put repercussions on the book even though they've been known about for many months and were guaranteed to have adverse effects.
    Reply
  • rluker5
    TSMC does have 9x the market cap as Intel and holds a near monopoly position on advanced node chip fabrication so maybe their lack of orders may have something to do with the reduced outlook for a company that makes machines to do this.
    But yeah, blame Intel because it sounds good.
    Reply
  • umeng2002_2
    They lost fake value.
    Reply
  • thisisaname
    If that lose was a country that it would be about the 72th in terms of GDP.
    Reply
  • acadia11
    guess they were banking on Altman’s $7 trillion AI play on the books. Aren’t their exports being limited to China currently, understand the Dutch government took over their controls?
    Reply
  • Mama Changa
    umeng2002_2 said:
    They lost fake value.
    Yeah, I love these articles pumping up values of companies.

    I amazed Huang doesn't get Nvidia into the fab business rather than rely on TSMC. He could afford 20-30 ASML high NA EUV machines, that's only $12 billion at most and another $10-15 billion for the fab factory. Peanuts to them.
    Reply
  • watzupken
    Mama Changa said:
    Yeah, I love these articles pumping up values of companies.

    I amazed Huang doesn't get Nvidia into the fab business rather than rely on TSMC. He could afford 20-30 ASML high NA EUV machines, that's only $12 billion at most and another $10-15 billion for the fab factory. Peanuts to them.
    Personally, I think we may all under-estimate the challenges of running a fab. Sure there are advantages to having your own fab, but as you can tell from the struggles that Intel, Samsung and Global Foundry went/ are still going through, it can go both ways. The startup cost may look reasonable, but the ongoing maintenance and R&D cost is not cheap.

    In any case, I was not surprised by the news and guidance. I feel a large part of ASML's revenue previously comes from Chinese companies who are trying to hoard these equipment before the sanction axe drops. After that, ASML are not even allowed to service these equipment sold to China resulting in further revenue lost. I feel Intel's contribution to ASML may not be as great as to significantly affect their revenue, considering that their foundry business is not exactly in high demand, and I don't think they are that financially sound to purchase a lot of expensive equipment only to leave them mostly idle.
    Reply
  • DavidLejdar
    More than $420 billion market cap losses across several semiconductor companies. Some of them have recovered since a bit though. And TSMC even hit a record high this morning.

    It shows why diversification in stock can be quite important. Other strategies possible as well, such as just waiting for dips like these... Personally, I mostly just have ETF saving plans, for long term, like 10+ years. So even if e.g. ASML will take a year to recover, I'll be getting ETF shares (with ASML in it) for a bit cheaper during that time. Still risk involved, of course.
    Reply
  • ottonis
    "ASML CFO Roger Dassen indicated that this shift is a return to more historically normal levels."

    So, that's the essence of this story. After a transient surge in demand for tools, mainly driven by China who wanted to pile up before stricter sanctions set in, demand is actually just normalizing to usual levels.
    Similar story with PC/laptop sales figures: They spiked during the fist stages of the pandemy because everyone went homeoffice, and then they went back to normal.
    Reply
  • redgarl
    Obviously, China was overestimating their ability to fab semiconductors and to make competitive home made chips.

    Seems to follow the news about just using Nvidia GPU for training.
    Reply