ASML Navigates Tariff Uncertainty as U.S. Market Grows and Chinese Orders Decline

Tariffs Uncertainty Clouds Outlook for ASML’s Earnings Semiconductor equipment makers, including ASML, were spared from the 10% "baseline" tariffs imposed by the Trump administration on Sunday. However, the impending sector-wide tariffs on chips have added a layer of uncertainty to ASML’s financial outlook. Net bookings, a key metric for the industry, are forecasted to reach 4.89 billion euros ($5.56 billion) in the first quarter of 2023, according to estimates from Visible Alpha. Analysts are closely scrutinizing the potential impact of these tariffs on ASML’s performance. ING analyst Marc Hesselink noted in a research note that the tariffs will be a central focus for ASML. Other analysts, however, caution that the cost of expanding operations in the United States is higher for chipmakers compared to other regions. ASML’s high-end EUV (Extreme Ultraviolet) lithography machines, the world’s most advanced chip engraving systems, are manufactured in the Netherlands and can cost up to $350 million each. Morningstar analyst Javier Correonero explains that a chip manufacturer is unlikely to forego the best technology, such as ASML’s EUV, simply due to a tariff, as there are no viable alternatives. KBC Securities analyst Thibault Leneeuw adds that ASML’s production of crucial components, like the EUV light source, in the United States provides a strategic advantage in mitigating tariff impacts. Interestingly, the U.S. is becoming a more significant market for ASML as Chinese spending on semiconductors slows down. In 2022, China accounted for 42% of ASML’s orders. This share is expected to drop to around 20% through the year, as indicated in ASML’s guidance provided in January. The exchange rate used in the report is $1 = 0.8800 euros. Reporting by Nathan Vifflin; Editing by Matt Scuffham and Sharon Singleton. Our Standards: The Thomson Reuters Trust Principles.