ASML hikes sales forecast for second time this year on strong AI chip demand

On Wednesday, ASML announced an upward revision of its sales forecast, marking the second adjustment this year, driven by an escalating demand for AI chips. The Dutch semiconductor equipment manufacturer now anticipates that its annual sales will range between 43 billion euros ($49 billion) and 45 billion euros, alongside a gross margin expected to fall between 54% and 56%. Previously, the company projected sales between 36 billion and 40 billion euros, with a gross margin of 51% to 53%. This revision follows ASML's earlier forecast increase last quarter, attributed to the ongoing strong demand for its cutting-edge EUV machines, which are uniquely equipped for the lithography processes necessary for producing the most advanced AI chips. The company expects this demand to persist as semiconductor manufacturers scale up production capabilities to capitalize on the AI boom. In a related development, Taiwan Semiconductor Manufacturing Co (TSMC), one of ASML’s prominent clients, reported a striking 68% increase in sales for June, primarily fueled by heightened demand for its chips. TSMC is also planning to establish two advanced chip packaging facilities in the Chiayi Science Park in southern Taiwan, as noted by Taiwan's National Science and Technology Council Minister Wu Cheng-wen. UBS analysts highlighted in a note dated July 10 that the expansion of semiconductor fabrication facilities, coupled with AI-related demand for top-tier chip production, is likely to bolster ASML’s performance in the latter half of the year. However, despite the thriving demand, semiconductor stocks have faced pressure as investors express concerns over the sustainability of substantial AI-driven capital expenditures. Additionally, ASML is encountering stricter export control regulations concerning its advanced chip manufacturing equipment. This development is ongoing, and updates will follow.