ASML: Order decline 'sounds the alarm', will tariffs add insult to injury?
ASML released its Q1 2025 earnings report (as of March 2025) during US pre-market hours on April 16, 2025, Beijing time. Key highlights:
1. Core metrics: Guidance and orders both declined. ASML reported Q1 2025 revenue of €7.74 billion, meeting market expectations (€7.74B). The YoY growth was primarily driven by continued EUV expansion, while QoQ decline reflected seasonal factors. Net profit reached €2.36B, up 92.4% YoY, beating expectations (€2.24B). Net new orders for $ASML(ASML.US) fell 44.5% QoQ to €3.94B, missing estimates (€4B+).
2. Segment performance: EUV growth offset seasonal declines elsewhere. System sales remained the core revenue driver (≈75% share). EUV shipments grew to 14 units (+3 YoY), while ArFi reached 25 units (+5 YoY). The average lithography system price rose to €74.6M amid higher EUV mix.
3. Geographic breakdown: Korea surged while China slowed. Korea/China/US/Taiwan accounted for 99% of revenue. Korea's share hit 40% due to SK Hynix's memory demand. China's revenue continued declining QoQ (27% share) as backlog cleared amid export controls.
4. Guidance: Q2 revenue forecast of €7.2-7.7B (below €7.76B consensus) with GAAP gross margin of 50-53% (vs 52.3% expected).
Dolphin Research's view: Weak guidance and order slump dampen market confidence.
ASML met its revenue and margin targets, with structural EUV/service mix boosting profitability. However, the disappointing Q2 outlook (traditionally a seasonal trough) raises concerns amid: 1) sluggish semiconductor recovery; 2) Intel/Samsung's capex cuts. The 44% order drop to €3.94B (below €4.06B adjusted expectations) signals no demand rebound.
Despite maintaining full-year revenue guidance of €30-35B, market expectations may downgrade to €30-33B. Ongoing "tariff policy" adjustments add pressure. With semiconductor cycle worries, client capex cuts, and tariffs, ASML's stock could face volatility without stronger confidence-building measures. For management commentary, follow Dolphin Research's upcoming call notes.
Key analysis:
1.1 Revenue: €7.74B (+46.3% YoY, -seasonal QoQ), driven by EUV. 1.2 Gross margin: 54% (above 52-53% guidance) from favorable mix. 1.4 Net profit: €2.355B (+92.4%). Weak Q2 margin guidance (50-53%) suggests Q1 peak.
2.1 Systems sales: €5.74B (+44.7%) with EUV/ArFi ASPs at €230M/€75.8M. 2.2 Service revenue: €2B (+51.1%) showing stability. Korea (40% share) outperformed China (27%) amid export restrictions.
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Dolphin Research's ASML coverage:
ASML
2025/1/29: China revenue to stabilize near 20% (4Q24 Minutes)
2025/1/29: The lithography leader returns
2024/10/15: China business settling at 20% (3Q24 Minutes)
2024/10/15: ASML: AI's first victim?
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