ASML reaffirms L-T outlook; Watch for the bounce
2min read ASML reaffirmed its long-term revenue and gross margin targets, bringing a much-needed boost for investors amid recent concerns over export restrictions to China. The Dutch semiconductor equipment maker projects sales to grow between €44 billion ($46 billion) and €60 billion ($63 billion) by 2030, driven by a robust demand forecast in artificial intelligence (AI) and other advanced applications. The company’s gross margin outlook remains strong at 56%-60%, highlighting confidence in maintaining profitability as it supplies advanced lithography tools for next-generation semiconductor production.
CEO Christophe Fouquet outlined a bullish vision for the semiconductor industry through 2030, forecasting a 9% annual growth rate for the global chip market, which he expects will exceed $1 trillion. He emphasized the transformative impact of AI, predicting AI chips to account for 40% of the total market by 2030. This AI-driven demand is expected to benefit ASML’s core product lines, particularly its extreme ultraviolet (EUV) lithography systems, which are essential for manufacturing complex AI and advanced logic chips.
During the investor day, Fouquet acknowledged recent conservative adjustments for 2025 due to slow recoveries in specific market segments, but he underscored the company’s long-term optimism. The confirmation of ASML's targets for 2030 indicates management's belief that AI adoption will drive substantial demand for semiconductor manufacturing equipment, even as some areas of the chip market remain sluggish. This reassurance comes as a relief to shareholders, with shares rising more than 3% following the announcement.
ASML’s advanced EUV technology positions it at the forefront of the AI boom, as demand for more sophisticated chips continues to grow. The company expects double-digit growth in EUV machine sales through 2030, driven by both advanced logic and memory chips, as chipmakers like Nvidia and TSMC ramp up production to meet AI demand. This focus on AI-enhanced manufacturing could be pivotal for the broader semiconductor industry, potentially signaling growth opportunities even amid geopolitical pressures.
ASML is seen as a bellwether for the semiconductor industry, with its sales reflecting the health of the global chip market. The company highlighted a split in demand patterns, where AI data center chips enjoy robust orders, while demand for chips in sectors like automotive, consumer electronics, and industrial applications has cooled due to previous inventory buildups. This divergence has resulted in challenges for chipmakers with less exposure to the high-growth AI segment.
Despite recent cuts to its 2025 revenue forecast, ASML continues to maintain capital allocation priorities, with a €12 billion share buyback plan through 2025, of which only 14% has been completed. CFO Roger Dassen reinforced the company’s commitment to return cash to shareholders through both dividends and buybacks, reflecting strong anticipated cash flows from AI and lithography-driven growth.
Geopolitical risks remain a concern, as ASML faces mounting pressure from the US to restrict exports of advanced equipment to China. Although ASML has long been barred from selling its most advanced EUV systems to China, recent export controls have limited even its less advanced machines. With China accounting for nearly half of ASML’s Q3 sales, these restrictions could have significant implications if tightened further.
ASML’s positive long-term outlook, coupled with its dominant position in critical semiconductor production equipment, reassures investors about the company's resilience and growth potential. While geopolitical challenges and demand disparities persist, ASML's confidence in AI and EUV technology suggests a robust growth trajectory, offering a more optimistic outlook for the semiconductor sector as it adapts to both regulatory and technological shifts.