By Mauro Orru

ASML Holding posted orders well above analysts' expectations for the fourth quarter as chip makers scrambled to get their hands on machinery to produce increasingly sophisticated semiconductors amid booming demand for artificial intelligence.

The Dutch supplier of semiconductor-making equipment booked 7.09 billion euros ($7.40 billion) in orders for the quarter, down from 9.19 billion euros a year earlier, but above analysts' forecast of 3.99 billion euros, according to consensus estimates by Visible Alpha.

The company said that 3 billion euros in orders were for its high-end extreme ultraviolet lithography systems that are used to print the most intricate layers on chips.

Orders for ASML's machines can vary greatly between quarters since they hinge on how much chip makers are willing to spend depending on demand trends they see.

Higher-than-expected bookings show that chip makers continue to bet on ASML's highly complex equipment in the race to build more advanced semiconductors to power the data centers behind the AI boom.

The beat follows a market selloff sparked by Chinese AI company DeepSeek earlier this week after it developed AI models that it said nearly matched American rivals despite using inferior chips, raising questions about the need to spend huge sums on advanced gear provided by Nvidia and other tech giants.

ASML shares closed 7% lower on Monday, wiping out more than $15 billion in market value, as investors digested what impact cheaper AI models could have on semiconductor demand and, ultimately, on suppliers of chip-making equipment like ASML.

ASML supplies semiconductor-making machinery to Taiwan Semiconductor Manufacturing Co., Samsung Electronics and other chip-making clients who face pressure from their own customers to churn out more capable chips.

"Consistent with our view from the last quarter, the growth in artificial intelligence is the key driver for growth in our industry," Chief Executive Christophe Fouquet said. "It has created a shift in the market dynamics that is not benefiting all of our customers equally, which creates both opportunities and risks."

While AI chips are in the midst of a spending bonanza, demand for legacy semiconductors found in cars, smartphones, laptops and other devices has been bumpy in recent months.

Car makers, suppliers as well as manufacturers of consumer electronics and industrial machinery cut spending on chips because they stockpiled the semiconductors they needed years ago.

ASML in October trimmed its sales forecasts for 2025, saying some areas of the semiconductor industry aside from AI were taking longer than expected to recover. The company is forecasting between 30 billion euros and 35 billion euros in sales this year, down from previous guidance of up to 40 billion euros.

However, it said the long-term outlook for the chip industry remains promising as it believes AI creates a significant opportunity that should help push global semiconductor sales to more than $1 trillion by the end of the decade.

ASML reported sales 9.26 billion euros for the fourth quarter, up from 7.24 billion euros a year earlier and beating both analysts' forecasts and company guidance.

Net profit climbed to 2.69 billion euros from 2.05 billion euros, beating analysts' forecasts. ASML said it would declare a total dividend of 6.40 euros per ordinary share for 2024, up 4.9% on year.

Gross profit--a closely watched metric for companies operating in the semiconductor industry--came in at 4.79 billion euros, generating a 51.7% margin that beat both consensus and company guidance.

For the current quarter, the company said it expects sales between 7.5 billion euros and 8 billion euros, with a gross margin between 52% and 53%.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

January 29, 2025 01:27 ET (06:27 GMT)

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