I think this is the reason for today’s drop in the chip names. ARM getting especially hit, oddly since they don’t actual fabricate any chips themselves. But Nvida, INTC, AMD, etc. all down as well. Is chip demand dropping?
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It is not the reason.
The preceding reason big ticket sales are down.
Restaurant and retail sales are up. Big ticket sales down. Recent Treasury data(I was not paying attention to which federal report, CPI?)
The funny thing is ASML provided that this would be a weak quarter.
**With that, I would like to turn to our expectations for the first quarter of 2024. We expect Q1 net sales to be between €5 billion and €5.5 billion. We expect our Q1 installed base management sales to be around €1.3 billion.
Gross margin for Q1 is expected to be between 48% and 49%. Lower revenue and margin relative to Q4 is primarily driven by lower emerging volume, along with an unfavorable change in product mix. In addition, we also expect EUV volume and lower installed base business in Q1 relative to Q4. The relatively slow start to the year is a reflection of the current state of the industry coming out of a downturn. As it relates to gross margin, I would like to make a few more comments on the 2024 margin drivers as well as our longer-term ambitions of 54% to 56% by 2025. We finished 2023 with a full year gross margin of 51.3% and there are a number of developments that could impact the gross margin in 2024.**
https://seekingalpha.com/article/4664714-asml-holding-n-v-asml-q4-2023-earnings-call-transcript
They came in at 5.3 billion at the mid of guidance.
Andy
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I don’t see any long term decrease in demand for chips. There are chips in damn near everything and that trend only goes in one direction.
On a related note, I’m a fan of the Acquired podcast. They did a deep four episode dive on NVIDIA and after listening I am convinced NVIDIA will take over the world. Or crumble. But I would never bet against them.
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There is no decrease in demand for beer either but logistics can be quite lumpy to the point that MIT’s logistics simulation is called…
Elsewhere there was the suggestion that the AI frenzy had pushed chip investing to the Peak of Inflated Expectations
Gartner Hype Cycle
NVDA (12 months)
AMD (12 months)
ARM (12 months)
If gaps fill, expect more pain!
The Captain
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I’ve been wondering if we hit that point as well as I have considerable exposure to stocks in that arena. I’ve been close to pulling the sell trigger.
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NVDA is holding up well but in this downturn, when you see NVDA fall, We could be near a bottom.
Andy
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By any rational assessment, ASML orders were supposed to be ‘down’ after their blockbuster / record/ bonanza Q4 Net system bookings
Their order execution lead time is 12-18 months, so most of that is actually going to drive the very strong growth that they’re expecting in 2025, particularly in EUV
Which also means 2024 sales performance will mostly be based on orders already bagged by Q4 '23
In any case, they guided for flat '24 sales vs. '23, and have just reiterated that:
‘Our outlook for the full year is unchanged with similar revenue compared to 2023. In line with the industry’s continued recovery from the downturn, we expect a stronger second half relative to the first half of the year. We view 2024 as a transition year and continue to make investments this year
both in capacity ramp and in technology to be ready for the upturn in the cycle.’
'We expect Memory revenue growth this year primarily driven by technology
transitions in support of advanced memory technology. We see lower Logic revenue this year, relative to last year, as customers digest litho capacity installed over the past year.
Turning to our businesses. For EUV, we continue to expect revenue growth in 2024. We plan to recognize revenue on a similar number of EUV 0.33NA systems as 2023. In addition, we expect revenue from one to two High NA systems.
We expect our non-EUV business to be down in 2024, primarily driven by lower immersion system sales, relative to 2023.’
file:///D:/Downloads/2024_04_17%20ASML%20Transcript%20investor%20call%20Q1%202024.pdf
Yes, they originally underestimated 'Q4 '23 bookings, and consequently over estimated '24 first half bookings.
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