ASML Expects Strong EUV Demand and Installed Base Business Support Growth in 2020
Dutch maker of EUV chip making equipment ASML Holding N.V. (ASML) published its 2019 fourth-quarter and full-year results.
- Q4 net sales of €4.0 billion, net income of €1.1 billion, gross margin of 48.1%
- Q4 net bookings of €2.4 billion
- 2019 net sales of €11.8 billion, net income of €2.6 billion
- ASML expects Q1 2020 net sales of between €3.1 billion and €3.3 billion and a gross margin between 46% and 47%
"Our fourth-quarter sales came in at €4.0 billion, bringing the total net sales for the year to €11.8 billion. We shipped eight EUV systems in the fourth quarter and we received orders for nine EUV systems. For ASML, 2019 was another growth year, mainly due to strong Logic demand for both DUV and EUV. We recorded an order intake for EUV of €6.2 billion during the year and saw the adoption of EUV in high-volume manufacturing.
"We expect that 2020 will be another growth year, both in sales and in profitability, driven by EUV demand and our Installed Base business. The Logic market is expected to remain strong in 2020, due to investments in 5G and high-performance compute applications. In the Memory market, our customers are starting to see the first signs of recovery," said ASML President and Chief Executive Officer Peter Wennink.
For the first quarter of 2020, ASML expects net sales of between €3.1 billion and €3.3 billion, and a gross margin between 46% and 47%. ASML also expects R&D costs of around €550 million and SG&A costs of around €140 million. The company's expected effective annualized tax rate is around 13% for 2020.
Supported by its long-term business plan, ASML will submit a proposal at the 2020 Annual General Meeting of Shareholders (AGM) to declare a total dividend for 2019 of €2.40 per ordinary share. Recognizing the interim dividend of €1.05 paid in November 2019, this leads to a final dividend of €1.35 to be paid in the second quarter. This is a 14% increase compared to the 2018 dividend.
The total amount repurchased under the share buyback 2018–2019 program, which was closed in December 2019, was €1.6 billion, for which ASML purchased 9.0 million shares. The share buyback program of 2018–2019 was not completed for the full amount.
ASML also announced a new three-year share buyback program, to be executed within the 2020–2022 time frame. As part of this program, ASML intends to purchase shares up to €6 billion, which includes a total of up to 0.4 million shares to cover employee share plans. ASML intends to cancel the remainder of the shares repurchased. This share buyback program will start on January 23, 2020.
ASML, which has a monopoly on advanced lithography equipment needed to make next-generation chips, is already a supplier to Samsung Electronics and Taiwan Semiconductor Manufacturing but hopes to drive deeper into China. Beijing wants to build a world-class homegrown chip industry to wean itself off foreign imports -- an effort that would need ASML’s one-of-a-kind machines. Yet it’s faced difficulty getting the Dutch government to renew a license to export to China amid ongoing trade tensions.
“Someone needs to make those chips and to make those chips you would need EUV, and there is basically only one place where they can get it,” Chief Executive Officer Peter Wennink said, referring to its advanced lithography equipment. “For our total business it doesn’t really matter.“
“It’s up to the Dutch government to determine whether there is a national security risk and of course there are views in the U.S. and China whether that’s a risk,” Wennink said, adding that the company has responded to requests for information from the Dutch government.
Asked whether he was optimistic about obtaining the license, Wennink said “the Dutch government takes very due care when it concerns the facts and the circumstances.”
hina’s Ministry of Foreign Affairs said in a statement last week the Netherlands should make an objective decision on ASML’s exports based on its own interests.
However, the U.S. maintains tariffs on roughly two-thirds of imports from China U.S. officials have urged allies to scrutinize business ties with Beijing, invoking concerns around national security and espionage. China, meanwhile, has threatened European countries with retaliation on trade if its companies are shunned.
The Dutch government has held back on renewing the license ASML needs to export its extreme ultraviolet lithography machines under pressure from U.S. officials.
For its part, the Netherlands says it will take its own decision on the matter, independent of foreign influence.