San Francisco Frontiers - Shares in Dutch chip giant ASML soar on bullish orders

Markets were closely scrutinising ASML's annual results after a rollercoaster few days for the tech sector sparked by the emergence of Chinese AI start-up DeepSeek.

And while the firm's after-tax profit for 2024 was down on the previous year, market players took heart from data showing net bookings of 7.1 billion euros ($7.4 billion) in the fourth quarter.

ASML shares, which had taken a battering during the week along with other Western tech stocks, rebounded by more than 10 percent at Wednesday's market opening.

The firm's annual report showed total sales of 28.3 billion euros, slightly above the company's forecast of 28 billion euros -- which CEO Christophe Fouquet hailed as "another record year."

"Consistent with our view from the last quarter, the growth in artificial intelligence is the key driver for growth in our industry," Fouquet said in a statement.

"It has created a shift in the market dynamics that is not benefiting all of our customers equally, which creates both opportunities and risks," he said.

ASML left its annual sales forecast of between 30-35 billion euros for 2025 unchanged since its last guidance in October.

The firm's after-tax profit for 2024 came in at 7.6 billion euros ($7.9 billion), compared to 7.8 billion euros for 2023.

- US-China tech war -

The tech giant is caught in the middle of a US-led effort to curb high-tech exports to China over fears they could be used to bolster the country's military.

Earlier this month, the Dutch government announced it was tightening its export controls on advanced semiconductor production equipment, but said the measures targeted a "very limited" number of goods.

ASML responded at the time that the moves would have "no additional impact" on its business.

Chief financial officer Roger Dassen admitted there were "quite a few moving parts when it comes to export controls from the US."

"But I would say that the combination and the impact of those, both US and Dutch measures, has been appropriately reflected in the guidance that we've given before," he said.

"So, the 30 to 35 billion euros properly reflects the limitations that we see from an export controls perspective."

Beijing has been infuriated by the export curbs, describing them as "technological terrorism."

The tech sector has also been buffeted by the sudden emergence of DeepSeek, a low-cost Chinese artificial intelligence chatbot to rival its US competitors.

In a paper detailing its development, DeepSeek said the model was trained using only a fraction of the chips used by its Western competitors.

"We used to talk about semiconductors everywhere. I think since November we started to talk about AI everywhere," said Fouquet.

"We truly believe that AI is going to bring even more opportunity to this semiconductor industry."

- 'Technical error' -

ASML left its long-term sale guidance unchanged at between 44 and 60 billion euros for 2030 as it pins its hopes on the rapidly expanding AI market.

Turning to the fourth quarter, ASML sales came in at 9.3 billion euros, above the previous guidance of between 8.8 billion and 9.2 billion euros.

Net profit for the fourth quarter was 2.7 billion euros, compared to the 2.1 billion euros booked in the third quarter of last year.

The firm has identified 2024 as a transition year, before what it hopes will be significant growth in 2025, although it has described the recovery as slower than expected.

It predicted total net sales in the first quarter of this year to be between 7.5 billion and 8.0 billion euros.

ASML executives were left red-faced in October when a "technical error" resulted in the early release of the firm's third-quarter figures.

The unexpected leak, plus a slump in bookings, sparked a major sell-off in ASML stock, with shares down as much as 15 percent.

Z.Phillips--SFF