ASML Holding NV ADR (ASML.US): Declining orders raise concerns, will tariffs be increased again?

ASML Holding NV ADR (ASML.US) released its first-quarter financial report for 2025 (ending in March 2025) before the US stock market on April 16, 2025 Beijing time, with the following highlights: 1. Key data: Guidance and orders both declined. ASML Holding NV ADR (ASML) achieved revenue of 7.74 billion euros in the first quarter of 2025, in line with market expectations (7.74 billion euros). The year-on-year revenue growth in this quarter was mainly driven by the continuous growth of EUV. However, there was a slight decline on a quarterly basis, mainly due to seasonal factors. The net profit for the first quarter of 2025 was 2.36 billion euros, a year-on-year increase of 92.4%, better than market expectations (2.24 billion euros). Net new orders in the first quarter fell to 3.94 billion euros, down 44.5% quarterly, below market expectations (over 4 billion euros). 2. Business performance: EUV continues to grow, while other product lines experience seasonal declines. System sales revenue remains the company's main source of income, accounting for nearly 3/4 of the company's revenue. The growth in the current quarter mainly came from the continuous growth of EUV. Specifically, 14 EUV systems were shipped, an increase of 3 units year-on-year; 25 ArFi systems were shipped, an increase of 5 units year-on-year. With the increasing proportion of EUV, the average selling price of the company's lithography systems further increased to 74.6 million euros in this quarter. 3. Revenue performance in various regions: Revenue continued to grow in South Korea, while revenue in mainland China continued to decline. In the current quarter, South Korea, mainland China, the United States, and Taiwan are the company's main sources of revenue, accounting for a total of 99%. Due to the demand for storage from companies like Samsung, the revenue in South Korea accounted for 40% in this quarter. Due to factors such as the gradual digestion of backlog orders and export restrictions, revenue in mainland China continued to decline quarter-on-quarter, but the proportion still remained at 27%. 4. ASML Holding NV ADR (ASML) performance guidance: Expected revenue for the second quarter of 2025 is 7.2-7.7 billion euros (below market expectations of 7.76 billion euros) and gross margin...The company's customers are mainly in the B-end, sales expenses are relatively stable, and the sales management expense rate for this quarter is 3.6%.1.4 Net profit end: ASML Holding NV ADR (ASML) achieved a net profit of 2.355 billion euros in the first quarter of 2025, a year-on-year increase of 92.4%. Although the company's revenue end was affected by seasonal factors this quarter, the profit end still saw a significant year-on-year growth, mainly benefited from the company's gross profit margin reaching an unexpected 54% this quarter. Although the company's first quarter financial data is decent, the guidance for the next quarter provided by the company is relatively weak. The company expects a decline in both revenue and gross profit margin in the next quarter, combined with the net new orders in the first quarter only amounting to 3.94 billion euros, which is lower than the adjusted buyer's expectation (4.06 billion euros). Although the full-year capital expenditure outlook for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR looks good, Intel Corporation and Samsung's expectations for capital expenditure are relatively cautious, directly affecting the company's operational outlook. The ongoing adjustments in the "tariff policy" have added uncertainty to both the company and the industry. The weak guidance and lower order situation in this quarter are difficult to instill confidence in the market. 2. Segment data: Continued growth in EUV, seasonal decline in other products The business of ASML Holding NV ADR (ASML) consists of system sales revenue and service revenue, with system sales revenue accounting for close to 3/4, which is the company's core source of income. 2.1 Business situation 1) System sales revenue ASML Holding NV ADR (ASML) achieved a system sales revenue of 5.74 billion euros in the first quarter of 2025, a year-on-year increase of 44.7%. The year-on-year growth in system sales is mainly driven by the EUV and DUV series products. However, on a quarterly basis, the system sales revenue in this quarter has declined, mainly due to seasonal factors and a decline in revenue from all other products except for EUV. The company's system sales revenue mainly comes from the EUV and ArFi segments, with a combined share of 89%. In terms of shipments: the company shipped 14 EUV machines this quarter, an increase of 3 machines from the previous year; and 25 ArFi machines were shipped this quarter, an increase of 5 machines from the previous year. Taking into account the shipment situation, ASML Holding NV ADRASML calculated that the average price of lithography systems in this quarter has increased to 74.6 million euros per machine. The average price per EUV machine continued to rise to 230 million euros, while the average price per ArFi machine remained relatively stable at around 75.8 million euros. In addition, the net new orders in this quarter have once again fallen to 3.94 billion euros, mainly driven by demand in the logic area. Among these order structures, about 60% of the demand comes from the logic sector, while storage demand remains at 40%. 2) Service revenue ASML Holding NV ADR (ASML) achieved a service revenue of 2 billion euros in the first quarter of 2025, a year-on-year increase of 51.1%. ASML Holding NV ADR's service revenue mainly includes equipment maintenance projects, with minimal impact from industry cycles. As the number of equipment shipments by the company increases, the growth rate of the company's service revenue has also accelerated, and the company's service revenue has now been maintained at around 2 billion euros. 2.2 Regional revenue situation ASML Holding NV ADRASML's revenue in this quarter mainly comes from South Korea, Mainland China, Taiwan, and the United States, with the combined revenue share reaching 99%. Due to the increase in demand for storage in South Korea, the revenue share from this region reached 40% this quarter. With the digestion of backlog orders from clients in Mainland China and the impact of export restrictions, the revenue share from Mainland China in this quarter remains at 27%. ASML Holding NV ADRASML's current share of EUV in total revenue has exceeded 40%, and the company's future performance will mainly be affected by EUV. As for the procurement of EUV products, the company's main clients will still focus on South Korea, the United States, and Taiwan. However, due to factors such as export restrictions, Mainland China will continue to focus on DUV procurement. As ASML Holding NV ADRASML is at the top of the semiconductor industry chain, it is affected by the overall industry. Although the semiconductor industry is in the phase of recovery from the bottom, the overall semiconductor end-market still appears weak. While there are expectations for increased capital expenditure from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and Micron Technology, Inc., Intel Corporation and Samsung are relatively cautious about capital expenditure. Driven by AI demand, the structured nature of the company's product shipments will be influenced by the overall semiconductor cycle. In addition, the "tariff policy" will also have a certain impact on the company's shipments and end markets in various regions, adding uncertainty to the company's performance. This article is reprinted from the "Dolphin Research" public account, GMTEight editor: Jiang Yuanhua.