One of the most significant semiconductor equipment companies in the world, ASML, reported an increase in revenue and profit in the second quarter but cautioned of macroeconomic “uncertainties” to come.

The Dutch business produces pricey equipment needed to generate the most sophisticated semiconductors in the world. Its clients include industry titans like TSMC, the largest producer of contract semiconductors in the world.

Due to the significance of the tools ASML produces, however, the company has also found itself in the midst of the U.S.-China technology conflict.

What ASML did in the second quarter compared to Refinitiv forecasts is as follows:

In contrast to expectations, net sales were 6.9 billion euros ($7.7 billion), not 6.72 billion euros. That is an increase of 27% from the prior year.

Net profit was 1.9 billion euros as opposed to the predicted 1.82 billion. That is an increase of 37.6% yearly. According to ASML, net sales could range between 6.5 billion and 7 billion euros in the third quarter of this year.

The company increased its forecast for 2023 and now expects its net sales to increase by 30% year over year in 2018, up from an earlier projection of 25% growth.

The improved prognosis, according to ASML, is the result of high sales from their deep ultraviolet (DUV) lithography machine, which is used to produce memory chips. These are integrated into a variety of devices, including servers, laptops, and smartphones, and they may one day be applied to artificial intelligence applications.

Peter Wennink, CEO of ASML, still issued a macroeconomic caution.

“Our customers across different market segments are currently more cautious due to continued macro-economic uncertainties, and therefore expect a later recovery of their markets. Also, the shape of the recovery slope is still unclear,” Wennink said in a press release.

High inventories of these parts have been a problem for businesses who design and manufacture the chips used in finished goods like cellphones. This is due to the weakening demand for final goods like consumer electronics.

Wennink explained this in a pre-recorded video interview posted on the firm website. This means that chipmakers are reducing the output of chips and thus using fewer ASML tools.

ASML has been affected by the American effort to deny China access to vital technologies, such as those used in the production of cutting-edge semiconductors.

The U.S. put broad export restrictions on some technologies to China last October out of concern that these technologies might be applied for military or artificial intelligence purposes.

The Biden administration has been lobbying allies to impose similar limitations in a similar fashion.

The Netherlands, where ASML is based, imposed its own export limitations on cutting-edge semiconductor machinery in June. To export some technologies, businesses will need government authorization.

At the time, ASML stated that it was likely that these regulations related to certain DUV devices that the business sold.

They were initially discussed in March, but the Dutch government just announced them in June. Wennink described them as “not a major surprise.”

“All in all, when you look at export control measures in total, we don’t expect a significant impact on our 2023 year,” but also on the longer term outlook, Wennink added.

In light of allegations that Washington is considering more curbs on technology exports to China, the CEO of ASML stated that ASML is waiting to see whether there are any additional restrictions from the U.S.

(Adapted from EconomicTimes.com)