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(Bloomberg) -- ASML Holding NV cut its revenue growth guidance in half for this year because fast-track shipping of its chip-making machines led to delayed sales recognition.
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Sales growth this year will come in at 10%, ASML said, adding that the value of machines on a fast shipping schedule will more than double to 2.8 billion euros next year as it races to get equipment to customers amid a chip shortage.
Shares of ASML dropped as much as 4.8% after the earnings result. They were trading 1.1% down at 479.3 euros per share as of 9:44 a.m. in Amsterdam on Wednesday.
“The demand is still significantly higher than what we can make,” CEO Peter Wennink said in a statement. “This was the situation in the last quarter it’s still the same.” But despite the “very strong” demand in automative, the company sees a slowdown particularly in products such as PCs and smartphones.
The company’s net sales forecast for the third quarter fell short of analyst expectations. It predicts sales of 5.1 billion euros ($5.22 billion) to 5.4 billion euros for the third quarter compared with an estimate of 6.48 billion euros in a Bloomberg analyst survey.
“Initial reaction will be negative, but it could create an opportunity as the overall picture remains strong,” Oddo BHF analyst Martin Marandon-Carlhian wrote in a note to clients. He said ASML will “continue to benefit from the structural growth of the lithography market in 2022 and far beyond.”
The company began skipping some final testing in its factories last year to speed up delivery. This meant clients get their machines more quickly, but ASML had to delay sales recognition for those shipments until formal customer acceptance.
The value of fast shipments in 2022 leading to delayed revenue recognition into 2023 is expected to increase to 2.8 billion euros from a previous forecast of about 1 billion euros, the company said.
“What we saw in the second quarter, which is basically an acceleration of supply chain constraints, is actually also happening in the third quarter,” Wennink said. “And I think it will happen throughout the remainder of the year.”
ASML shares have been under extra pressure in recent weeks as the US pushes the Netherlands to ban the chip-tool maker from selling some deep ultraviolet lithography systems to China. Washington is focused on banning sales of the most advanced type of DUV technology, immersion lithography machines, Bloomberg reported earlier this month, citing people familiar with the matter.