Chip-Machine Supplier ASML Lifts Guidance on Strong AI Demand -- 2nd Update

By Mauro Orru

ASML Holding raised its sales guidance for the year as chip makers continue to plow billions of dollars into its semiconductor-making machines to churn out increasingly advanced artificial-intelligence chips.

The Dutch group, which counts Taiwan Semiconductor Manufacturing Co., Samsung Electronics and Intel among its largest clients, has been a key beneficiary of the AI boom since the 2022 release of ChatGPT ushered in a spending bonanza from companies seeking to harness the technology.

Chip makers have been scrambling to secure ASML's advanced chip-making tools as they face pressure from their own customers to produce more powerful semiconductors for AI data centers, smartphones and other devices.

"The semiconductor industry's growth outlook continues to solidify, driven by ongoing AI-related infrastructure investments," ASML Chief Executive Christophe Fouquet said. "Demand for chips is outpacing supply. In response, our customers are accelerating their capacity expansion plans for 2026 and beyond."

ASML lifted its guidance for the year to reflect growing demand for its products: It now expects sales between 36 billion euros and 40 billion euros, equivalent to a range between $42.47 billion and $47.19 billion, compared with prior guidance of 34 billion euros to 39 billion euros. ASML reported sales of 32.67 billion euros in 2025.

Meanwhile, its gross margin-a closely watched metric of pricing power and profitability-is still expected between 51% and 53%. For 2025, the company posted a gross margin of 52.8%.

The higher projections show that ASML feels confident that AI demand and the fundamentals of the semiconductor industry will remain strong in the coming months despite geopolitical uncertainty from the Iran war, which is causing disruption for some suppliers.

Last month, Swiss company VAT Group--which makes vacuum valves that allow semiconductor manufacturers to avoid particle contamination in production processes--said it expected weaker sales in the first quarter after the conflict delayed shipments of certain components and materials for products that customers had already ordered.

The Strait of Hormuz, a key waterway used to transport everything from fertilizer to grow food or helium to make AI chips, has been largely closed since the war between the U.S., Israel and Iran broke out in late February.

ASML posted sales of 8.77 billion euros for the first quarter, up from 7.74 billion euros a year earlier. The figure is above analysts' forecast of 8.69 billion euros, according to Visible Alpha.

The group disclosed its quarterly orders in January for the last time and will from now on provide its total backlog on an annual basis. Company executives have argued that bookings weren't an accurate reflection of business momentum as they can be lumpy between quarters and decided to forgo the metric.

Still, Fouquet said orders continued to be very strong, citing strengthening demand for ASML's machines in recent months as chip makers scramble to produce enough semiconductors for their own customers.

South Korea's SK Hynix, which supplies high-bandwidth memory chips to Nvidia, said last month that it planned to purchase roughly $8 billion of ASML's extreme ultraviolet lithography machines, high-end systems that are used to print the most intricate layers on semiconductors. SK Hynix said it expects to complete the purchase by the end of next year.

ASML's net profit grew to 2.76 billion euros from nearly 2.36 billion euros a year earlier, beating market expectations. Gross profit increased to nearly 4.65 billion euros from 4.18 billion euros, generating a 53% margin that beat consensus.

For the current quarter, the company expects sales between 8.4 billion euros and 9 billion euros, with a gross margin ranging from 51% to 52%.

Write to Mauro Orru at [e-mail]

(END) Dow Jones Newswires

04-15-26 0202ET