ASML’s Order Volume Quadruples in Quarterly Rise as China Emerges as its Largest Chip Equipment Buyer

Netherlands-based company ASML continues to dominate the lithographic scanner manufacturing industry, a vital element for semiconductor component production. The company’s Q4 increase in order volume skyrocketed to an unprecedented €9.2 billion, three and a half times more than the previous three months of the year.

According to a report by Bloomberg, the numerical value of the orders dramatically surged from €2.6 billion to €9.19 billion over the past quarter. This demand surge is primarily due to the cutting-edge lithographic scanners that ASML produces. The company last year recorded a revenue increase of 30% to €27.6 billion, with CEO Peter Wennink stating that this is their peak growth level and such a performance will be unlikely this year.

Contrary to the industry experts’ Q4 valuation of ASML’s order book at about €3.6 billion, it ended up almost tripling. Of the total €9.19 billion, €5.6 billion was accounted for by the most sophisticated EUV-lithography systems. CFO Roger Dassen noted that ASML’s clients’ product inventory levels are approaching normal and better than a few quarters ago.

Throughout 2023, high demand for ASML’s lithographic equipment from Chinese chip manufacturers allowed the company to offset the negative impacts of global economic crises on its revenue. While Chinese clients constituted just 8% of ASML’s Q1 revenue in the previous year, their share climbed to 39% in Q4, making China the company’s largest market. Notably, this is a slight decline from Q3, where China accounted for 46% of ASML’s revenue, attributed to the implementation of new sanctions. South Korea forms the company’s second-largest market at 25%, followed by Taiwan (13%), the U.S. (11%), and Europe, Africa, and the Middle East (EMEA) collectively at 8%, a drastic rise from their 1% share in Q1. The Q1 order flow shifted not just to China but also to EMEA.

ASML’s Q4 order growth came earlier than Citigroup analysts’ projection of a spike in H1 this year. ASML will continue to expand even in the coming year. The company’s revenue sequentially increased from €6.67 billion to €7.24 billion in the previous quarter. ASML executive estimates suggest up to 15% of the company’s Chinese revenue will be affected by U.S. export restrictions introduced earlier. Meanwhile, upon the release of ASML’s optimistic financials, its stock price in Amsterdam zoomed by 7.5%, marking its highest increase since November 2022.