asml faces headwinds as tariff wars and chip demand create uncertainty

2025-04-21 asml

Veldhoven, Monday, 21 April 2025.
The semiconductor industry is at a crossroads. President Trump’s proposed tariffs are raising concerns. Intel and Samsung might scale back their operations. These factors create significant anxieties for ASML. The company’s market outlook is impacted and the stock performance is affected. Despite these concerns, ASML maintains its 2025 sales forecast of 30 to 35 billion euros. Uncertainty remains due to trade tensions and evolving chip demand. The company’s reliance on EUV technology is a key factor.

Tariffs and demand concerns

The semiconductor industry is navigating a complex situation with potential tariffs from the U.S. and uncertainties about the sustained growth of AI chip demand [1]. ASML’s CEO, Christophe Fouquet, acknowledged that tariff uncertainty is clouding the long-term outlook [7]. Potential challenges include import duties, supply chain disruptions and rising costs [7]. These factors, coupled with possible pullbacks from major clients like Intel and Samsung, add pressure to ASML’s market position and stock performance [1][7].

Financial performance and market position

ASML’s first-quarter sales reached €7.7 billion, aligning with the company’s expectations [2][3]. This figure surpassed analyst predictions [2][3]. The gross margin was 54%, exceeding expectations due to increased capacity and higher average selling prices for EUV lithography systems [2][3]. Despite a 46% increase in sales, net orders totaled €3.9 billion, falling short of the anticipated €4.8 billion [2][3]. This shortfall contributed to a subsequent drop in the company’s stock price [2][3].

EUV technology and sales

Sales data indicates that EUV lithography systems accounted for 56% of total sales, an increase from 46% in the previous year [2][3]. This growth is attributed to higher EUV shipments [2][3]. China accounted for 27% of ASML’s system sales in the first quarter [7]. This is a decrease from 49% in the same period last year [2][3]. The company anticipates that sales to China will stabilize around 20% in 2025, aligning with pre-2023 levels [2][3].

Analyst perspective and future outlook

Despite current market headwinds, some analysts view ASML as a worthwhile investment [2][3]. ASML’s strong performance and market positioning are not fully appreciated due to investor focus on order volumes [2][3]. An analyst has set a price target of $948, suggesting a potential 48% upside [2][3]. This target is supported by an estimated 17% annual EBITDA growth rate and a 6% free cash flow growth rate [2][3]. ASML’s unique position in the semiconductor equipment market, particularly with its EUV technology, makes it difficult to replace [2][3].

Strategic advantages and partnerships

ASML’s dominance in EUV lithography is unmatched, holding over 90% of the market share in this segment [6]. The company’s collaboration with research institutions, such as IMEC, drives advancements in sub-2nm chip technologies [6]. This partnership ensures ASML remains at the forefront of technological innovation [6]. The increasing demand for advanced chips, fueled by AI, 5G, and IoT, continues to drive orders for ASML’s EUV systems, priced at $200 million each [6].

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market outlook tariff disputes