(Bloomberg) -- ASML Holding NV, Europe’s largest semiconductor equipment producer, said its fourth-quarter sales would likely be higher than analyst estimates as demand remains strong for its advanced chip-making machines. Shares surged. 

The strong earnings are a boost to the Dutch company, which finds itself caught up in growing tensions between Washington and Beijing. ASML, which generated 15% of its revenue in China last year, said in a statement on its third-quarter results Wednesday that new US restrictions on the way chip companies do business with China’s tech industry won’t seriously affect its shipments there next year.

“Based on our initial assessment, the new restrictions do not amend the rules governing lithography equipment shipped by ASML out of the Netherlands and we expect the direct impact on ASML’s overall 2023 shipment plan to be limited,” Chief Executive Officer Peter Wennink said in a statement. The company expects the total indirect impact from U.S. measures to be around 5% of its backlog, Wennink said on Wednesday.

ASML forecast sales of €6.1 billion to €6.6 billion ($6 billion to $6.5 billion) this quarter. That compares with an estimate of €6.13 billion in a Bloomberg analyst survey.

The Dutch chip-gear maker’s third-quarter sales were €5.8 billion, which beat the average analyst estimate of €5.3 billion. The company continued to delay recognition for some deals in order to speed up delivery. 

Chief Financial Officer Roger Dassen said in a video transcript accompanying the release that the US measures could have an “indirect effect on the demand for our tools” but supply is still below the demand. 

“To the extent that at a certain point in time we would be in a position that we can no longer supply certain tools to certain customers in China, the demand outside of China is still such that we would get compensation for that in the current environment from other customers,” Dassen said.

Some US suppliers are beginning to withdraw staff from one of China’s leading chip companies in the wake of the regulations. 

Applied Materials Inc., KLA Corp. and Lam Research Corp. have started or are preparing to pull employees from Yangtze Memory Technologies Co., the country’s most advanced maker of memory chips, Bloomberg reported last week.

Key Insights 

  • ASML said it expects revenue of €21.1 billion this year with a gross margin approaching 50%.
  • The value of fast shipments in 2022 leading to delayed revenue recognition into 2023 is expected to be around €2.2 billion, it said.
  • ASML will discuss its scenarios for 2025 at a Nov. 11 investor day. The company will provide update on its long-term business prospects, including a new share buyback program plan.

Market Context

  • ASML shares rose as much as 8%, most since December, after the earnings results. They were up 4.4% to €421.45 per share as of 4:00 p.m. in Amsterdam on Wednesday. They have fallen around 40% so far this year.
  • The Stoxx Europe technology index is down about 36% over the period.

(Updates with Wennink’s quote on the impact of US measures in the third paragraph.)

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