HTSC said that Dutch semiconductor equipment leader ASML's 2Q earnings exceeded expectations and is bullish on the rebound of the global semiconductor equipment industry.
According to the research report released by HTSC, Dutch semiconductor equipment leader ASML's 2Q earnings exceeded expectations, and Taiwan Semiconductor's 2nmEUV order drove a significant increase in new orders, with high growth in mainland China's revenue. The company's Q3 guidance is slightly lower than market expectations, and the guidance for 2024/25 remains unchanged. On the industry side, the semiconductor inventory level continues to improve, with the utilization rate of lithography equipment for logic and memory customers continuing to increase. The strong development of AI is driving the recovery and growth of most industries, leading over other terminal submarkets, with a YoY decrease in logic demand, and memory demand expected to increase. Bullish on the recovery of the global semiconductor equipment industry.
ASML's new order amount for 2Q increased MoM, and the company maintains its guidance for 24/25 years, with high growth in mainland China's revenue.
From ASML's 2Q24 earnings conference, we see that: 1) ASML's Q2 earnings exceeded previous guidance, and new orders increased significantly higher MoM, mainly due to the release of Taiwan Semiconductor's 2nmEUV orders, with Q3 guidance lower than Bloomberg consensus expectations; 2) The company's guidance for the industry's 2024 outlook remains unchanged, with expected revenue growth YoY in 2024, and revenue expected to be between 30-40 billion euros in 2025; 3) Mainland China maintains its strong position, and ASML states that it can maintain the installed equipment base in China, with follow-up attention still needed for government measures. 4) For the industry, semiconductor inventory levels continue to improve, and the strong development of AI leads over other terminal submarkets. Logic demand is expected to experience a YoY decrease in 2024, while memory demand is expected to grow.
2Q earnings exceeded expectations, with Taiwan Semiconductor's 2nmEUV order driving a significant increase in new orders.
1)ASML's 2Q24 revenue was 6.24 billion euros, a YoY decrease of 10% but an increase of 18% MoM, slightly exceeding the previously guided range of 5.7-6.2 billion euros, and exceeding the Bloomberg consensus expectation (5.95 billion euros), achieving a gross margin of 51.5%, slightly exceeding guidance (50-51%). 2) 2Q new orders were 5.6 billion euros, a MoM increase of 56%, of which EUV new order was 2.5 billion euros, a MoM increase of 281%, of which logic customers accounted for 73%, a MoM increase of 175%, and some were Taiwan Semiconductor's 2nm orders. 3) Revenue was split by product as follows: EUV, ArFi, KrF, ArF Dry, and i-line, accounting for 31%, 50%, 9%, 7%, and 2%, respectively. 4) By region, mainland China, South Korea, and Taiwan of China accounted for 49%, 28%, and 11% of 2Q revenue respectively, with a MoM increase of 20%, 77%, and 120%. Mainland China's revenue accounted for 49% in the first half of the year, a YoY increase of 141%.
3800E EUV equipment continues to be delivered, and Q3 guidance is slightly lower than market expectations, with 2024/25 guidance unchanged.
The company delivered the second Low NA EUV device NXE:3800E in 2Q and is expected to gradually transition with customers. 3800E will account for the majority of shipments in the second half of the year. At the same time, the company shipped the second High NA EUV device in 2Q, and the company expects the momentum for growth of High NA devices to be good. Revenue for High NA devices is expected to be confirmed in the second half of the year. The company expects Q3 revenue to be 6.7-7.3 billion euros, slightly lower than Bloomberg consensus expectations of 7.45 billion euros, with a gross margin expected to be 50-51%, slightly lower than Bloomberg's expectations of 51.1%. However, the company maintains its guidance for revenue to remain flat YoY in 2024, and Q4 revenue is expected to exceed 9 billion euros. ASML emphasized that revenue in 2025 should be between 30-40 billion euros. The company's current backlog of orders is 39 billion euros.
Industry: demand is gradually recovering, and mainland China maintains a strong position. ASML states that follow-up attention is still needed for Dutch government measures.
On the industry side, the semiconductor inventory level continues to improve, with the utilization rate of lithography equipment for logic and memory customers continuing to increase. The strong development of AI is driving the recovery and growth of most industries, leading over other terminal submarkets. Logic demand is expected to experience a YoY decrease in 2024, while memory demand is expected to increase. SEMI predicts that semiconductor manufacturing equipment will recover in 2024, with sales expected to reach a new high of 124 billion US dollars in 2025. We are bullish on the recovery of the global semiconductor equipment industry. Mainland China maintains its strong position, with China accounting for more than 20% of current orders on hand for the company. ASML states that it can maintain the installed equipment base in China, with follow-up attention still needed for Dutch government measures.