Jornal Do Brasilia - 'Good news': Dutch chip giant ASML welcomes DeepSeek

The arrival of DeepSeek and its AI chatbot developed at a fraction of the cost of Western competitors has upended the tech world and wiped billions off share prices.

But ASML CEO Christophe Fouquet said that DeepSeek addressed two problems faced by the AI industry -- it was too expensive and too energy-hungry.

"If you ask me, for us, anyone that lowers cost is in fact good news for ASML," Fouquet told reporters as he presented the firm's 2024 results.

"Because lower cost means AI can be used in more applications. More applications means more chips. And we are in the business of providing equipment to people to make chips," he said.

Given the potential size of the AI market, Fouquet said more upstarts would likely explode onto the scene in coming months.

Asked about DeepSeek as the "elephant in the room", Fouquet quipped: "You should expect to see a few elephants in the room in the next few months or few years."

"And I think the competition, especially when it comes to software... will be very high."

- 'Very bullish' -

Fouquet hailed a "record year" for ASML in 2024 terms of sales, which came in at 28.3 billion euros ($29.5 billion).

Investors cheered a strong final quarter in terms of net bookings that were almost double market expectations at 7.1 billion euros.

Shares in ASML, which had suffered from a DeepSeek-inspired rout like the rest of the tech sector, rebounded strongly, up around 10 percent.

Despite a dip in after-tax profits to 7.6 billion euros, compared to 7.8 billion euros for 2023, Fouquet said the firm was "very bullish" for the future.

"If I summarize a bit the future, it's bright... I think, if anything, AI has strengthened the opportunity for this business," he said.

Nevertheless, he admitted that while some of ASML's customers were seizing the opportunities presented by AI, others were lagging behind, making the outlook uneven.

"The opportunity that AI represents for the entire economy, for the entirety of humanity, is huge. And we are just at the beginning of that," he said.

ASML left its annual sales forecast for 2025 of between 30-35 billion euros unchanged since its last guidance in October.

Longer-term sale guidance was also unchanged at between 44-60 billion euros for 2030 as ASML pins its hopes on AI.

- US-China tech war -

The tech giant is caught in a US-led effort to curb high-tech exports to China over fears they could be used to bolster the country's military.

Earlier this month, the Dutch government announced it was tightening export controls on advanced semiconductor production equipment, but said the measures targeted a "very limited" number of goods.

Chief financial officer Roger Dassen admitted there were "quite a few moving parts when it comes to export controls from the US."

But he added that the impact of US and Dutch measures "has been appropriately reflected in the guidance that we've given before".

Beijing has been infuriated by the export curbs, describing them as "technological terrorism".

Dassen declined to speculate on what further curbs the new US administration of President Donald Trump could impose, but noted ASML's exposure to China was declining.

China accounted for 41 percent of the firm's sales in 2024 but Dassen explained this was due to ASML honouring a backlog of deliveries.

He predicted the proportion of sales to China would return to the "low 20-percent" mark in coming years.

- 'Technical error' -

Turning to the fourth quarter, ASML sales came in at 9.3 billion euros, above the previous guidance of between 8.8 billion and 9.2 billion euros.

Net fourth quarter profit was 2.7 billion euros, compared to the 2.1 billion euros booked in the third quarter of last year.

"It was a strong quarter, a quarter where the company really ran on all cylinders," said Dassen.

ASML predicted total net sales in the first quarter of this year of between 7.5 billion and 8.0 billion euros.

H. Garcia--JDB