Share Prices & Company Research


22 April 2021

ASML Earnings Exceed Expectations

ASML is the global leading manufacturer of highly complex lithography systems, used in the semiconductor industry to create integrated circuits. The price and size of these machines are in tandem with one another, with the cost being up to €200m each and the size being equivalent to shipping containers. ASML once again reported positive results for the first quarter of 2021 which exceeded analyst estimates and laid out an increasingly positive outlook for the company.
The lithography machines which ASML manufacture are integral to the production of semiconductors, and utilise rapidly advancing technologies, which results in extensive costs via research and development and therefore near impenetrable barriers to entry. The company operates in a market which supplies an industry experiencing exponential demand growth and the inability of semiconductor suppliers to meet demand. Considering this supply and demand disparity in the market, ASML’s order book is expanding rapidly. Lithography systems focus beams of energy directed onto the micro level of a computer chip and are essential for semiconductor manufacturers to be able to increase the computing power of these chips.

Back in January the company stated that the annual sales would grow by 10% in 2021 but has now revised this to 30%, with sales in the first quarter amounting to €4.36bn. TSMC, Samsung and Intel are the conglomerates controlling the supply of semiconductors with plans for huge expansions to meet global demand, as technology becomes increasingly reliant on the development of computer chips. Without ASML, their expansion plans would grind to a halt. The outlook is looking increasingly positive for ASML and is only expected to improve further as the technology industry and more specifically the semiconductor industry needs the company’s expertise and manufacturing technology to progress and develop their capacity.

The future of the company continues to look bright with numerous drivers set to benefit their success over the coming years. Although the demand for ASML’s system hardware is essential, many large companies are increasingly purchasing the utilisation software of ASML as a short-term strategy to help meet semiconductor demand. These less capital-intensive software sales result in higher profit margins for ASML. In addition, there are some geopolitical moves which are set to drive demand for ASML, such as the US and Europe looking to take some market share in the computer chip industry away from Asia, a region that has dominated the sector.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
ASML Earnings Exceed Expectations

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