What does lithography machine giant Asmebrey explain?

On April 17th local time, Dutch semiconductor equipment supplier Asma announced its performance for the first quarter of 2024. Its total net sales revenue was 5.3 billion euros, a decrease of 27% compared to the previous month; The gross profit margin was 51.0%, compared to 51.4% in the previous quarter; Its net profit was 1.2 billion euros, a 40% decrease compared to the previous period, and orders fell significantly.

Affected by it, the stock price of Asma Company plummeted significantly on that day. During the night trading session of the US stock market, Asma, which was listed in the US, plummeted by more than 11% at one point; In the European stock market, Asma's stock price also plummeted by more than 6% at one point. At 1:40 am on the 18th, Asma's stock price was also on the brink of collapse, falling at least 7.5%.

Asma CEO Wenningke stated in a statement that his outlook for this year's full year performance remains unchanged, and it is expected that the situation in the second half of the year will be better than in the first half, which is consistent with the industry's sustained recovery from the downturn.

From the perspective of orders, Asma stated that it sold a total of 70 lithography machines in the first quarter of this year, including 66 new ones and 4 second-hand ones. The new order amount is 3.6 billion euros, of which 656 million euros are EUV lithography machine orders, compared to 5.6 billion euros in the previous quarter. Compared to the record order volume of 9.19 billion euros in the fourth quarter of 2023, its orders in the first quarter of this year decreased by over 60%, far below the market expectation of 5.1 billion euros. Analysis suggests that it is precisely because of its profit halving and a two-thirds decrease in order volume that Asma's stock price fell in response, causing its market value to evaporate by over 200 billion yuan.

As is well known, Asma, headquartered in the Netherlands, is the world's largest lithography machine manufacturer, occupying up to 80% of the high-end lithography machine market share. All the EUV lithography equipment required for the most advanced processes of chips by global chip manufacturers comes from Asma.

In recent years, as an industry giant, Asma has frequently encountered lightning problems for various reasons.

Firstly, the cost remains high. The increasingly harsh business environment in the Netherlands has led to long-term industrial hollowing out. Like many developed Western countries, the construction capacity and maintenance level of infrastructure in the Netherlands continue to decline, and the highways, housing, and power grid in the Eindhoven area where Asma Company is located are in a state of long-term disrepair, all of which have added a lot of costs to the operation of the enterprise.

Secondly, it is influenced by the intervention and monopoly measures of the United States. According to sources, the US government has been pressuring allies including the Netherlands, Germany, South Korea, and Japan to further tighten restrictions on China's access to semiconductor technology. However, the US actions have encountered resistance in some countries, and the Netherlands and Japan have responded coldly. They hope to avoid taking a new round of measures that may harm the interests of manufacturers. However, Asma strongly disagrees with the actions of the United States, as their actions have seriously curbed the economic development of the Netherlands.

The pressure policy of the United States has caused many adverse effects on Asma Company, and may even harm its research and development budget in the future. The main driving force behind Asma's sharp increase in profits in recent years has come from China. The CFO of Asma predicts that with the implementation of export restrictions, Asma's sales in the Chinese market in 2024 may decrease by 10% to 15%. Dutch journalist Mark Heijink, who has been tracking Asma for a long time, believes that the Dutch government should take a stronger stance in negotiations with the United States.

The gradual rise of Chinese lithography machines has shaken Asma's monopoly on global lithography machines. Once there is no monopoly, it is natural for orders and profits to plummet.

In addition, the political environment in the Netherlands has been continuously turbulent. Although the Netherlands is one of the European countries with the strictest immigration policies, the number of immigrants has still increased significantly in recent years, leading to the rise of populism and conservatism. All of these have had a negative impact on the Dutch economy, with Asma being the first to bear the brunt.

In summary, as an industry giant, Asma Company is currently facing numerous difficulties. Overcoming these difficulties and returning to its former glory may not be a one-time success. The stance of playing against the United States and the outcome of competition with China seem to be the key to solving the problem.