Previously emphasized that ASML's biggest issue at this stage is a growth problem.
Lithography Leader ASML Q1 Earnings:
Revenue €7.742B, up 46% year over year, down 16% sequentially, slightly below prior guidance midpoint;
Gross margin 54%, up 3 percentage points year over year, up 2.3 percentage points sequentially, above prior guidance upper bound;
Operating income €2.74B, up 97% year over year, down 18% sequentially; Operating margin 35.4%;
Net income €2.36B, up 92% year over year, down 13% sequentially; Net margin 30.4%;
Q1 buybacks €2.7B;
On lithography systems, Q1 shipped 77 systems, total up 10% year over year:
EUV: 14 systems, revenue €3.214B, 56% of system revenue, ASP €230M.
ArFi: 25 systems, revenue €1.894B, 33% of system revenue, ASP €75.77M.
ArF dry: 6 systems, revenue €115M, 2% of lithography revenue, ASP €38.27M.
KrF: 22 systems, revenue €640M, 9% of lithography revenue, ASP €13.05M.
I-Line: 13 systems, revenue €142M, 2% of lithography revenue, ASP €4.42M.
EUV revenue share rebounded this quarter; EUV ASP above expectations, mainly due to higher 3800 vs. 3600 shipment mix; NXE:3800 throughput ramp to 220 wph will make it the mainstream choice for low-NA customers; Configuration of EUV tools revenue above expectations; High-NA feedback from Intel and Samsung very good; all 5 High-NA EXE:5000 systems shipped to 3 customers; Q2 will ship EXE:5200; Installed base EUV share now exceeds DUV; EUV will drive installed base growth.
Net bookings €3.936B this quarter, up 9% year over year, of which EUV €1.2B, up 83% year over year, down 60% sequentially. Logic/memory split in net bookings 60%/40%, little change.
Mainland China single-quarter lithography revenue €1.5B, down 20% year over year, 27% of lithography revenue; replaced by Korea as ASML's largest customer region, consistent with prior management guidance of China share normalizing to ~20%; however, management noted China demand remains strong this quarter; full-year China revenue share guidance raised slightly to 25%.
Outlook:
Guiding Q2 revenue €7.2-7.7B, up 15%-23% year over year; Installed base revenue €2B; Q2 gross margin 50%-53%;
2025 revenue maintained at €30-35B, up 6%-24% year over year; 2025 gross margin maintained at 51%-53%; High-NA dilutes margin; H2 revenue higher than H1;
2025 AI demand remains robust; non-AI semiconductor uncertainty remains elevated; 2025 memory market stays strong; logic market growing on AI demand explosion;
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.