Wilton manufacturer logs another big year despite industry woes
Even as demand plunged in one of its two principal markets, ASML hired more than 325 people last year to staff its Wilton plant that is Connecticut’s biggest exporter to the digital economy, both to fill newly created jobs and as replacements for employees that left.
The Netherlands-based company makes machines that beam circuitry onto semiconductors and digital displays, with sales increasing 8 percent last year to $13.1 billion and profits totaling $2.9 billion.
The company has been touting an emerging class of EUV machines — an acronym for extreme ultraviolet — that uses light at wavelengths 14 times smaller than ASML’s older generation of machines. ASML shipped 26 EUV machines last year, eight more than in 2018.
ASML now has more than 1,750 people in Wilton, nearly triple that of Bridgewater Associates, the town’s next largest private-sector employer as of last summer and the largest hedge fund in the world with its headquarters in Westport.
The company has gotten $14 million in state incentives to help underwrite the expansion, with the Connecticut Department of Economic and Community Development highlighting ASML among a half-dozen “success stories” statewide. Others include the animated feature film producer Blue Sky Studios in Greenwich, the Stamford consumer finance giant Synchrony Financial, and the Jackson Laboratory genomics center in Farmington.
ASML’s ballooning Connecticut workforce comes in the context of a state economy that has struggled to generate momentum, with the Connecticut Department of Labor estimating on Thursday a net gain of 5,500 jobs in 2019. The private sector’s 0.4 percent gain was less than a third the rate at which U.S. employers added jobs last year.
Hiring at ASML has not let up in the New Year, with the company posting two dozen positions in the past week alone of 150 openings in Wilton across a range of disciplines including software engineering, optical manufacturing and mechanical design.
After completing a new parking garage last year at its Danbury Road factory to accommodate its growing workforce, last October ASML expanded for a second time in the Wilton Corporate Park across the street, in what was among the largest office lease transactions in Fairfield County last year.
Coming back with a vengeance?
ASML sells to two big buckets of customers: those making devices requiring chips with “memory” functionality to store data, and those with “logic” needs to crunch mathematical algorithms that spit out commands and information.
Stamford-based Gartner reported in mid-January that memory chip sales plummeted by nearly a third last year, driven by an oversupply that had been earmarked to support demand by conglomerates with “hyperscale” computing ambitions in the industry parlance, such as Google parent Alphabet and Amazon as they push into applications requiring artificial intelligence with attendant data storage needs.
Speaking on a Wednesday conference call with investment analysts, ASML CEO Peter Wennink said he expects a rebound in the market for memory chips, but with his crystal ball still cloudy on that front.
“In my experience, memory always comes back with a vengeance,” Wennink said. “When it comes, it always comes quick — so ... we’ll just have to wait and see.”
The memory chip overhang pushed overall industry sales down 12 percent to $418 billion, Gartner determined, with Intel retaking the top spot for global sales from Samsung with sales of $66 billion for a 16 percent market share. Taiwan chip makers were the dominant buyers for ASML systems last year, accounting for just over half of all revenue and displacing South Korea as the company’s top market. U.S. sales stayed steady at 16 percent of ASML revenue.
Andrew Norwood, a London-based analyst for Gartner, noted as well the impact on semiconductor manufacturers of the tariff dispute between China and the United States, and concurrent steps by the Trump administration to embargo sales to the Chinese chip manufacturer Huawei Technologies after an investigation into whether it stole trade secrets from U.S. companies.
“The U.S.-China trade war seems to be easing as we move into 2020,” Norwood stated in commentary accompanying his January report. “However, during 2019 the U.S. added several Chinese companies, including Huawei, to the ... [list]restricting the sale of U.S. components. The immediate impact was to push Huawei into looking outside the U.S. for alternative silicon suppliers.”
Despite China sales dropping to 12 percent of all revenue from 18 percent the previous year, Wennink said Wednesday he sees no downside at present for ASML’s outlook for sales to China.
Alex.Soule@scni.com; 203-842-2545; @casoulman