ASML: ex-CEO “Supply-Chain” Wennink Has Morphed into CEO “Tariff” Fouquet – One Excuse After Another
I have written extensively about ASML in both Seeking Alpha and now Substack, going back to my January 10, 2011 article “What’s in Store for ASML in 2011?”. Two things permeate the success and/or lack of success of ASM:
1. ASML has the BEST technology and the BEST engineers.
2. ASML management has been beset with excuses by playing the blame game first on supply chain disruptions and now on tariffs, while at the same time misreading the “tea leaves.”
One notable comment in an earnings call was a catalyst for one of my articles of October 24, 2021 entitled “ASML: Too Inconsistent, Too Overbought To Recommend.” In that article I wrote( I’m extracting certain snippets of the article and you can read it for yourself by clicking on the hyperlink):
“In the past 15 quarters, ASML missed EPS 4 times and missed revenues 7 times, as shown in Table 1. This is highly unusual. Applied Materials for example, missed EPS 0 times and missed revenues 1 time. Lam Research missed EPS 0 times and missed revenues 4 times.
Roger Dassen, CFO of ASML attributes part of the problem by stating in the company’s 3Q 2021 earnings call:
“In the process of increasing capacity, we experienced some issues regarding materials shortage in our supply chain.”
This raises an important question. How could a company with a near monopoly in its DUV product, making only 20+ systems a month, have problems with materials in a supply chain. When combined with the inconsistencies shown in Table 1, it is apparent that a problem with supply chain management exists.
For another example of mismanagement, CEO Wennink made the comment:
“Over the last 15 years, we’ve structurally underestimated the growth of the industry."
ASML probably does their own internal analyses, but uses outside firms as well, presenting charts from them in their Investor Day presentations.
For Investor Day 2021, for example, they include data from Gartner in 5 pages and VLSI Research in 3 pages.
For Investor Day 2018, they include data from Gartner in 5 pages and VLSI Research in 2 pages
For Investor Day 2016, they include data from Gartner in 5 pages and VLSI Research in 2 pages
The question arises, if you are admitting you underestimated the growth of the industry for 15 years, why do you use the same companies again and again? It's pretty simple for astute management - change the sources of information. It's not rocket science.”
At the time of that article, ASML stock closed at $787.56. At the time of this writing, ASML stock is priced at $645.67. From October 24, 2021, the date of my article through today, ASML’s share price has shown a growth of -11.70% compared to +31.02% for the S&P Technology Index (^IXT), as shown in Chart 1.
Chart 1
Current Earnings Call and Predicament for ASML
Earnings Miss and Lowered Guidance
In Q1 2025, ASML reported net sales of €7.7 billion, a decline from €9.3 billion in Q4 2024. Net income decreased to €2.4 billion from €2.7 billion in the previous quarter. Net bookings fell to €3.9 billion, down from €7.1 billion in Q4 2024. Despite these declines, ASML maintained its full-year 2025 revenue guidance between €30 billion and €35 billion, with a gross margin forecast of 51% to 53%.
China Exposure and Tariff Implications
ASML's sales to China remained stable at 27% of total net system sales in Q1 2025, consistent with Q4 2024. This stability follows a period in 2024 when China's share of ASML's system sales peaked at 49% in Q2, as shown in Table 1, driven by Chinese chipmakers accelerating purchases of ASML's older deep ultraviolet (DUV) machines in anticipation of potential new export restrictions, according to The Information Network’s report Sub-100nm Lithography: Market Analysis and Strategic Issues. The U.S. government is considering imposing tariffs on semiconductors, which could increase costs for chip equipment makers and slow progress on chip facility construction. Additionally, ASML faces renewed pressure to limit sales to China, which could impact future revenue streams.