China's DeepSeek's rise also affects Dutch chip giant ASML as net profit dips

Wednesday, January 29, 2025 - Dutch tech giant ASML reported a slight drop in its annual net profits for 2024, citing geopolitical challenges and the rise of China's AI start-up DeepSeek as factors impacting the sector. The company’s net profits for the year amounted to 7.6 billion euros, down from 7.8 billion euros in 2023. Total net sales for 2024 reached 28.3 billion euros, slightly surpassing the company's forecast of 28 billion euros, and marking an increase from 27.6 billion euros in 2023.

CEO Christophe Fouquet described the year as “another record year” for the firm in terms of annual sales, highlighting that growth in artificial intelligence is driving industry expansion. However, he acknowledged that the rapid rise of AI is shifting market dynamics in ways that benefit some customers more than others, creating both opportunities and risks.

ASML’s 2025 sales forecast remains unchanged at between 30-35 billion euros, despite challenges from geopolitical headwinds. The company is navigating tighter export controls on high-tech semiconductor equipment, particularly to China, as Western governments seek to limit the flow of technology that could strengthen China’s military capabilities. In response, ASML stated that these measures would not have a significant impact on its business, though Beijing has condemned the export restrictions as “technological terrorism.”

The company is also facing new competition from DeepSeek, a low-cost Chinese AI chatbot developed with fewer semiconductor chips than its Western counterparts, which has added uncertainty to the tech landscape. ASML has long anticipated strong growth in the AI sector, projecting total net sales of between 44 and 60 billion euros by 2030.

In the fourth quarter, ASML reported sales of 9.3 billion euros, surpassing expectations, and net profits of 2.7 billion euros, up from 2.1 billion euros in the third quarter. Despite slower-than-expected growth in 2024, the company remains optimistic about its prospects in 2025, with first-quarter sales predicted to be between 7.5 billion and 8.0 billion euros.

Earlier in the year, a technical error led to the early release of ASML’s third-quarter figures, triggering a significant drop in stock prices as much as 15%. Despite this setback, ASML continues to look ahead to the future, with the hope of significant recovery in the coming year.