ASML shares dive amid China jitters

ASML shares dive amid China jitters
by AFP Staff Writers
The Hague (AFP) July 17, 2024

Shares in Dutch tech giant ASML which supplies chip-making machines to the semiconductor industry took a tumble Wednesday on the back of a report that Washington was eyeing stricter export restrictions to China.

The company posted better-than-expected results earlier Wednesday for the second quarter, as well as a full order book, boosted by the development of artificial intelligence.

ASML's share price, however, plunged by almost eleven percent by close on the blue chip Amsterdam stock exchange's AEX index, losing almost 43 billion euros ($47 billion) in value, the ANP news agency reported.

It is the biggest drop in ASML's share price since March 2020, it added.

The tumble came as investors worried about renewed trade tensions with China.

"A Bloomberg report that the Biden Administration is discussing tighter export restrictions for semiconductors and semiconductor equipment going to China has caused an upsetting stir," said market analyst Patrick O'Hare at Briefing.com.

ASML is one of the leading manufacturers of equipment to make state-of-the-art semiconductor chips, which power everything from mobile phones to cars.

But the semiconductor industry has become a geopolitical battleground as the West seeks to restrict China's access over fears the chips could be used for advanced weaponry.

ASML announced this year that it had been blocked from exporting "a small number" of its advanced machines to China, amid reports of US pressure on the Dutch government.

Based in Veldhoven in southern Netherlands, ASML generated around half of its turnover in China for the second consecutive quarter, despite export restrictions already in place, imposed in particular by Washington.

The restrictions currently concern ASML's highly advanced EUV machines, and not all the machines manufactured by the Dutch group.

The company received significantly more orders overall in the second quarter than in the first, according to a statement.

Profit jumped by 354 million euros to 1.5 billion euros while sales were up from 5.2 billion euros to 6.2 billion euros.

ASML expected third-quarter sales between 6.7 billion and 7.3 billion euros, chief executive Christophe Fouquet said in a statement.

"We currently see strong developments in AI, driving most of the industry recovery and growth, ahead of other market segments," Fouquet said, adding that the full year outlook remained unchanged.