Globally critical chip firm ASML jumps 6% after earnings; sees limited impact from U.S. China curbs

Dutch firm ASML makes one of the most important pieces of machinery required to manufacture the most advanced chips in the world. U.S. chip curbs have left companies, including ASML, scrambling to figure out what the rules mean in practice.

ASML, one of the world's most important firms in the Semiconductor supply chain, reported strong earnings that bucked the trend of a slowdown in the chip industry.

The company said that the curbs on high-end chips to China would have a limited impact on its business.

ASML is not a chip maker. Taiwan's TSMC is required to make the most advanced chips because it sells $200 million extreme ultraviolet lithography machines. It's one of the most important firms in the Semiconductor industry because it's the only company in the world that makes such machines.

Revenue for the third quarter came in at 5.77 billion euros, beating the analysts' forecast of 5.161 billion. It was a 10% increase over the previous year.

When compared to the second quarter of this year, net profit was 1.7 billion euros, a decrease of 2% but higher than the same period last year.

The share price of chip firms has been hammered in the year 2022, as the boom in the Semiconductor industry comes to an end. ASML shares are down a lot.

The strong results from ASML sent shares higher in European morning trading.

"This is a classic case of ASML's relative resilience versus the rest of its peers coming to the fore."

The strength that ASML sees is a reflection of the relative positioning of the company. The broader cycle seems to be going through a decline.

There is uncertainty in the market due to a number of global macroeconomic concerns including inflation, consumer confidence and the risk of a recession.

The overall demand for our systems continues to be strong.

The U.S. recently introduced rules to stop China from getting or manufacturing advanced chips which could be used in applications such as supercomputing.

The United States restricted its citizens from supporting the development or production of certain chips in China without a license.

ASML told employees in the US to stop servicing Chinese customers.

The company is assessing and following the new US export control regulations.

The new restrictions do not change the rules governing the equipment that is shipped by ASML out of the Netherlands.

The most advanced chips are made by ASML. It will be hard for Chinese chipmakers to catch up to TSMC if they can't get their hands on the tool.