4.16.25
Sales in the second quarter of 2025 were €7.7B. That is at the high end of the guided range of €7.2B to €7.7B. That is flat from the first quarter. Guidance range for total sales in the third quarter is €7.4B to €7.9B. That means the midpoint of revenue guidance is €7.65B, which would mark three consecutive quarters of flat sales. Total sales in the year 2025 for the company will grow around 15% over 2024. Total sales in 2024 were €28.3B, thus Q4 is going to be a large revenue quarter. The first half of 2025 saw total sales of €15.4B. The midpoint of Q3 sales guidance is €7.65B. Adding these three together and comparing to the €32.55B in total revenue for 2025 leaves €9.5B of revenue in the fourth quarter of this year. That will be a huge finish if it comes through and a huge disappointment if it does not.
Drilling one level down to the memory segment (ASML does not break out memory between DRAM and NAND,) revenue was €1.735B. That is the lowest level in the last five quarters. This is surprising for this point in the memory cycle, when enthusiasm about demand and pricing strength should be driving memory producers to invest more in capacity. Going back over the last two years, memory lithography sales bottomed in the second quarter of 2023, at €897M. Since then, the trend has been upward, with an all-time high in sales to memory customers reached two quarters ago, in Q4 of 2024. That level of €2.775B was three times higher than the low six quarters prior. Lithography tools are the most expensive in a fab. Capacity is planned around them. This makes their sales lumpy. Layer tariffs on top of this, which have caused Q4 of the last three years to be peaks, and sales are even less smooth. It may be that Q2 memory revenue will be an outlier to the low side.
Bookings give some insight into this, and bookings do not support this. Memory bookings in Q2 were at their lowest level in the last two years. However, bookings have even more variation than revenue does. Bookings in the fourth quarter of 2023 were €4.32B, more than twice as high as the average of the following four quarters. The average of the last seven quarters’ memory bookings is €2.09B. That duration is approximately the range of the current upturn in memory. That average is close to the average of memory sales across the same seven quarters. There is a lead time of between one and two years for new litho tools, so the bookings in this period aren’t for the same machines that produced the revenue. But this does show that the next year of ASML memory sales volume will not be that different from what was seen in the prior year. I don’t think there is a big surge of photo capacity coming in memory, nor do I see a big decline.
I think a reason for a recent surge in photo tool sales to memory makers is that the industry has been bifurcated in this cycle. Leading edge capacity has been tight the for the last two years. Older nodes were undersupplied in late 2023 and early 2024, then tipped into oversupply for a year, and now seem to be sliding into shortage again. Also, much of the enthusiasm in memory this cycle has been for HBM. The conversion to more HBM from non-AI memory products is not limited by photo. This means the addition of HBM capacity will be more visible in memory sales at Applied Materials, Tokyo Electron, and Lam Research. Still, the combination of low bookings and low memory sales this quarter is negative for my thesis that oversupply in memory capacity will emerge in the second half of calendar 2025. If a flood of photo capacity is to drive that, it is not visible in ASMLs sales pipeline now, at least not at the level of resolution management provides.
Which brings me to their commentary. Regarding short-term market dynamics, “memory remains very strong because there also our customers are investing in their latest HBM and DDR5 products.” The company expects system revenue to remain strong in 2025. Notably, they did not say 2025 memory revenue will grow over 2024. Sales to China will account for over 25% of their total, a moderation from mid-30%.
Just one question on the memory market was asked during the conference call. The answer essentially repeated what they said in the call three months ago. That is, demand for advanced memory is still strong, driven by AI products. The lower bookings for memory this quarter follow more than a year of strong bookings. The ASML executives repeated in this answer that they don’t see bookings as a good indicator of the health of a given part of their business. The China market for memory and mainstream logic continues to show healthy demand for WFE, despite export restrictions. The executives got multiple questions to guide 2026 revenue from analysts, after saying they would not provide that information.
— S. Hughes (short MU)