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Industry looks to ASML earnings for fresh clues on the global chip shortage

By David Burrows

09:34, 18 July 2022

ASML office in Silicon Valley, US. Photo: Shutterstock

Investors will be keen to see what ASML (ASML) reveals in its second quarter earnings on Wednesday. But so, too, will be millions of industrialists, from automotive to electronics companies whose production rates have suffered under a global chip shortage.

The Netherlands-based company is a major supplier of equipment to the semiconductor manufacturing industry, which has struggled to keep pace with the massive increase in demand seen during and following the Covid pandemic.

ASML expects second-quarter 2022 net sales between €5.1bn and €5.3bn and a gross margin between 49% and 50%This compares with first quarter net sales of €3.5bn and a gross margin of 49%.

Brokers continue to see ASML offering a degree of upside with 12 out of 17 analysts rating the shares a ‘buy’; while the consensus rating is a ‘moderate buy’.

Simply Wall St rates ASML as 10.9% undervalued, estimated using a Discounted Cash Flow model. It considers €522.43 fair value; compared to the current valuation of around €465.40 a share.

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ASML (ASML) share price chart

Pandemic-linked global chip shortage

Supply issues have been the major story this year (and last year) for semiconductors, with lockdowns stalling manufacture. Not only has it had an impact on anything from auto manufacture to PC and mobile phones, but it has also kept chip prices high.

Chipmakers struggled to satisfy huge order numbers from makers of PCs who witnessed an upturn in demand as millions were encouraged to work from home during the pandemic.

But workers now returning to the office and chipmakers including Micron (MU) and AMD (AMD) have pointed to a slowing demand for products requiring semiconductors. Rocketing inflation and the rising cost of living is affecting consumer spending on PCs and smart tech.

Investors will, therefore, be keen for any news on the oulook, and whether headway on the global chip shortage has been made since the first quarter. 


16,341.20 Price
-1.660% 1D Chg, %
Long position overnight fee -0.0261%
Short position overnight fee 0.0042%
Overnight fee time 22:00 (UTC)
Spread 30.0


36,160.60 Price
-0.070% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 2.2


4,559.30 Price
-0.150% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.8


16,424.90 Price
-0.020% 1D Chg, %
Long position overnight fee -0.0220%
Short position overnight fee -0.0002%
Overnight fee time 22:00 (UTC)
Spread 1.5


China restrictions?

However, any cooling in supply pressures may be short-lived.  Earlier this month shares in ASML took a hit (falling over 7%) after a Bloomberg News report claimed the US government wanted to restrict the company from selling equipment to China.

The majority of chips worldwide are manufactured with DUV lithography (which is what ASML provides).

Any restrictions, if imposed, would significantly hit China’s chip manufacturing capacity and once again spark global semiconductor shortages.

China is ASML's third largest market, after Taiwan and South Korea.

According to reports, the US government is pressing the Dutch government to stop ASML selling to China technology essential in the production of chips.

The stock price of ASML fell as low at €409 after the news report but has recovered some ground since, to around €465.

As things stand, there is no imminent decision expected on restrictions to China. In late November 2021, the ASML share price reached as high as €770

Markets in this article

690.43 USD
-0.2 -0.030%
Advanced Micro Devices Inc (Extended Hours)
118.54 USD
-2.98 -2.460%
Micron Technology Inc (Extended Hours)
74.24 USD
-1.85 -2.440%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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