ASML Stock Drops as Chip Supplier Slashes Full-Year Sales Outlook

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ASML’s machines are key to the global chipmaking industry. Courtesy Bart van Overbeeke/ASML

ASML beat expectations for second-quarter earnings, but shares in the critical supplier of manufacturing equipment to the semiconductor industry were tumbling Wednesday after the group slashed its full-year sales forecast.

ASML (ticker: ASML) reported second-quarter net income of €1.4 billion ($1.4 billion) on sales of €5.4 billion, delivering earnings per share of €3.54. Wall Street had been expecting EPS of €3.48 on revenue of €5.3 billion, based on the estimates of analysts surveyed by FactSet.

“Some customers are indicating signs of slowing demand in certain consumer-driven market segments, yet we still see strong demand for our systems, driven by global megatrends in automotive, high-performance computing, and green energy transition,” Peter Wennink, the group’s president and chief executive, said in a statement.

But the earnings beat was overshadowed as the company took an ax to its full-year guidance, cutting its 2022 sales growth forecast to 10% from 20%. ASML’s U.S.-listed shares fell 2.2% in premarket trading on Wednesday while the Amsterdam-traded stock dropped 1.5%.

The cause of the forecast downgrade was supply-chain delays that have pushed the chip equipment supplier to ramp up fast shipments to customers, delivering units before final testing has taken place. This results in a lag in revenue recognition until final testing and formal acceptance takes place on the customers’ site.

“This growth is lower than previously guided as a result of an increase in the number of fast shipments expected in the remainder of 2022, the revenue for which will be delayed into 2023 at an amount of around €2.8 billion,” Wennink said.

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