Global storage giants rally collectively! Can the storage sector continue to rise?
Surge in memory production drives ASML orders to double, golden era for semiconductor equipment has arrived
Author | Eric
Global leader in semiconductor lithography equipment $ASML Holding (ASML.US)$ released its latest Q4 earnings report, with pre-market stock price soaring. Let's take a look at how solid this earnings report is.
Key focus points of this earnings report:
Net bookings explode as memory customers kick off an epic production expansion wave
ASML’s net bookings for this quarter reached 13.16 billion euros, increasing by 86% year-on-year and 144% quarter-on-quarter, far exceeding market consensus of 6.795 billion euros, with EUV contributing 7.4 billion euros, up 147% year-on-year. The company's total order backlog stands at 38.8 billion euros, significantly higher than the market expectation of 32.8 billion euros, including 25.5 billion euros from EUV.
Breaking down the internal structure of net bookings, memory accounts for 56%, up 17 percentage points year-on-year, while logic accounts for 44%. In absolute terms, the surge in memory production has officially begun. Memory-related net bookings for this quarter reached 7.34 billion euros, up 167% year-on-year, hitting a multi-year high.
During this quarter’s earnings call, management reiterated expectations that the logic market will continue to grow through 2026 driven by booming AI demand, while the memory market will see strong growth fueled by HBM/DDR5.
Revenue contribution from mainland surged unexpectedly, with projections indicating it will fall back to 20% of total revenue by 2026
In recent years, demand for ASML's DUV lithography machines in mainland China has experienced explosive growth. Revenue from mainland China accounted for up to 49% of ASML’s total lithography machine revenue in Q2 and Q3 of 2024, far exceeding the historical average range of 10-20%. However, this percentage began to decline afterward.
Although revenue from mainland China reached 2.62 billion euros this quarter, a year-on-year increase of 42%, accounting for up to 36% of total revenue, management indicated that by 2026, the revenue contribution from mainland China would drop to around 20%.
Announced a 12-billion-euro share buyback plan but did not raise its 2030 financial targets
Management forecasts Q1 2026 revenue to be between 8.2 billion and 8.9 billion euros, representing a year-on-year growth of 6%-15%. Installed base revenue is expected to be 2.4 billion euros with gross margins in the range of 51%-53%. Based on the midpoint of the revenue guidance, net profit is projected at 2.45 billion euros, a year-on-year increase of 4%.
Management set a revenue target for 2026 of 34 billion to 39 billion euros, reflecting year-on-year growth of 4%-19% with gross margins between 51%-53%. The EUV segment is anticipated to grow significantly, while non-EUV business is expected to remain flat. However, demand for metrology equipment in the non-EUV segment is quite robust.
However, regarding long-term growth targets, ASML's management did not revise upward its guidance this time, maintaining its 2030 revenue target of 44 billion to 60 billion euros, with gross margins of 56%-60%. Based on the midpoint of the target, ASML's compound annual growth rate (CAGR) for revenue from 2025 to 2030 will be less than 10%, while net profit CAGR will be only 6%.
Q4 Earnings Summary:
- Q4 revenue was 9.72 billion euros, an increase of 5% year-on-year, surpassing market consensus expectations of 9.56 billion euros and reaching the upper end of the previous revenue guidance range of 9.2-9.8 billion euros.
- Q4 gross margin was 52.2%, up 0.5 percentage points year-on-year, exceeding market consensus expectations of 51.9% and reaching the upper end of the previous gross margin guidance range of 51%-53%.
- Q4 net profit was 2.84 billion euros, a year-on-year increase of 5%, below market consensus expectations of 2.91 billion euros but consistent with the midpoint of the previous net profit guidance at 2.84 billion euros.
Q4 Business Breakdown:
– The Net system business, mainly consisting of lithography machines and other metrology equipment, reported revenue of 7.58 billion euros, up 6% year-over-year. Among this, lithography machine revenue was 7.28 billion euros, a year-over-year increase of 7%, while revenue from other metrology equipment was approximately 300 million euros, also growing by 7%.
– The Net service and field option business, primarily focused on services, generated revenue of 2.13 billion euros, representing a 1% decline year-over-year.
Specifically for the lithography machine business, ASML delivered 102 units this quarter, marking a 23% decrease year-over-year.
– EUV lithography machine revenue reached 3.64 billion euros, a year-over-year increase of 22%, accounting for 48% of total revenue, surpassing market consensus expectations of 3.08 billion euros.
– ArFi lithography machine revenue totaled 3.03 billion euros, reflecting a 4% year-over-year growth, contributing to 40% of total revenue.
Summary
Overall, due to the unique position of lithography machines in the supply chain, ASML's growth in recent years has been constrained by sluggish demand from memory clients, relying mainly on the expansion wave of mature process nodes in mainland China and $Taiwan Semiconductor (TSM.US)$ the expansion boom.
Although the guidance for future performance growth remains modest, the strong net bookings in this earnings report, driven by the memory expansion wave, alleviated market concerns about short-term growth.Moving forward, the market will focus on investment opportunities across the entire semiconductor equipment sector.。
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
Comment (1)
to post a comment
15
53