Previously emphasized that ASML's biggest issue at this stage is a growth problem.
Lithography Leader ASML Q4 Earnings:
Revenue was €9.263B, up 28% year over year and 24% sequentially, slightly above the prior guide's upper bound. Full-year 2024 revenue was €28.263B, up only 2.6% year over year.
Gross margin was 51.7%, up 0.3 percentage points year over year and 0.9 percentage points sequentially, above the prior guide's upper bound.
Operating income was €3.36B, up 40% year over year and 37% sequentially. Operating margin was 36.2%. Full-year 2024 operating income was €9.023B, down 0.2% year over year.
Net income was €2.69B, up 32% year over year and up 32% sequentially; net margin was 29.1%. Full-year 2024 net income was €7.572B, down 3.4% year over year.
No share repurchases in Q4.
Q4 backlog was €36B, flat sequentially. Four customers received the first Multibeam shipments in Q4.
Looking specifically at lithography systems, ASML shipped 132 systems in Q4, up 7% year over year in total:
EUV: 14 systems, revenue of €2.989B, representing 42% of lithography system revenue, with an ASP of €213M.
ArFi: 39 systems, revenue of €2.918B, 41% of system revenue, ASP of €74.81M.
ArF dry: 6 systems, revenue of €142M, 2% of system revenue, ASP of €23.72M.
KrF: 52 systems, revenue of €640M, 9% of system revenue, ASP of €12.32M.
I-Line: 21 systems, revenue of €142M, 2% of system revenue, ASP of €6.78M.
EUV revenue share rebounded this quarter but remained slightly below DUV share. Low-NA EUV is expected to drive the bulk of 2025 EUV revenue. Two high-NA systems recognized revenue in Q4 with minimal gross margin impact. High-NA feedback from DRAM and logic customers has been very positive. EUV share of the installed base is expected to rise in 2025, and the overall installed-base business should continue to grow.
Net bookings this quarter were €7.088B, down 23% year over year, of which EUV was €3B, up 180% year over year but down 46% sequentially.
Management noted that net bookings fluctuate too much quarter to quarter and do not materially affect results; the company will stop providing the metric and replace it with backlog data.
Mainland China lithography revenue this quarter was €1.84B, down 14% year over year, accounting for 27% of system revenue. Korea replaced China as ASML's largest customer region, consistent with management's guidance for China's share to normalize.
Outlook:
Q1 2025 revenue is guided at €7.5-8.0B, up 42%-51% year over year; installed-base revenue of €2.1B; Q1 gross margin of 52%-53%.
Full-year 2025 revenue is maintained at €30-35B, up 6%-24% year over year; full-year gross margin maintained at 51%-53%. No high-NA EUV revenue recognition in Q1 2025, concentrated in H2, resulting in higher H1 vs. H2 gross margins.
2025 AI demand remains robust; non-AI semiconductor uncertainty remains elevated; 2025 memory market stays strong; logic market growing on AI demand explosion;
Mainland China revenue share is expected to fall to pre-2023 normalized levels (averaging ~16%) in 2025. The 2025 outlook already incorporates U.S. and Dutch export restrictions.
Management maintains the 2030 revenue target of €44-60B unchanged, with gross margin of 56%-60%.
Maintaining prior view:
ASML's biggest issue at this stage is growth. ASML's 2024 results showed no growth; if 2025 revenue comes in at €30-35B, combined with gross margin and OpEx guidance, net income optimistically reaches only ~€9B, which at the current market cap still looks expensive.
While ASML's monopoly position is unchallenged, that does not mean lithography demand grows linearly, nor does it directly capture the AI demand explosion. TSMC, positioned in midstream manufacturing, can directly interface with downstream AI customers and capture the full AI dividend.