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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
ASML’s Surging Orders Suggest Strong Demand for AI Chips
ASML, the chip manufacturing equipment maker, said orders for its most advanced machines surged last quarter, suggesting producers of artificial intelligence processors were increasing capacity before China’s DeepSeek this week triggered a panic over future demand.
Netherlands-based ASML lost its title as Europe’s most valuable tech company on Monday when it was caught up in a stock market panic over DeepSeek that also wiped hundreds of billions of dollars from the value of Nvidia, Broadcom, and other chipmakers.
The Impact of DeepSeek
The low-cost techniques used by the Chinese company to create a breakthrough new AI model suggested that big advances could be made without the need for the vast investment in chips and computing power that US rivals such as OpenAI, Meta, and Elon Musk’s xAI have planned.
DeepSeek’s focus on efficiency was in part caused by US-driven export controls that limit China’s access to ASML’s equipment and Nvidia’s most powerful chips.
ASML’s Strong Demand for Production Capacity
However, Wednesday’s annual results from ASML pointed to strong demand for the equipment that chip manufacturers such as Taiwan Semiconductor Manufacturing Company, Intel, and Samsung need to produce the most cutting-edge chips for customers such as Nvidia and Apple.
Shares in ASML jumped 11 per cent in early trading on Wednesday.
Net Bookings and Sales
ASML said that its net bookings in the fourth quarter, which includes orders placed by customers but not yet delivered, hit €7.1bn, far higher than the €4bn analysts had expected, according to consensus estimates from Visible Alpha.
Of that figure, orders for its “extreme ultraviolet lithography” (EUV) machines — its most advanced tools — made up €3bn, also well ahead of analysts’ forecasts.
Overall net sales for the fourth quarter grew 24 per cent to €9.3bn, while the group reported net income of €2.7bn, slightly ahead of estimates.
CEO’s Perspective
Strong demand for production capacity for AI chips is offsetting an otherwise lacklustre semiconductor market, ASML chief executive Christophe Fouquet said.
“The growth in artificial intelligence is the key driver for growth in our industry,” he said. “It has created a shift in the market dynamics that is not benefiting all of our customers equally, which creates both opportunities and risks as reflected in our 2025 revenue range.”
Conclusion
ASML’s strong demand for production capacity and surging orders for its most advanced machines suggest that the company is well-positioned to benefit from the growing demand for AI chips. The company’s CEO emphasized the importance of AI in driving growth in the industry, and the company’s results support this view.
FAQs
Q: What is ASML?
A: ASML is a chip manufacturing equipment maker based in the Netherlands.
Q: What is DeepSeek?
A: DeepSeek is a Chinese company that has created a breakthrough new AI model using low-cost techniques.
Q: Why did ASML’s stock price jump?
A: ASML’s stock price jumped 11 per cent in early trading on Wednesday after the company reported strong demand for its production capacity and surging orders for its most advanced machines.
Q: What is EUV?
A: EUV stands for “extreme ultraviolet lithography,” which is ASML’s most advanced tool for producing cutting-edge chips.
