In a recent development, Süss MicroTec, a leading German chip-making equipment supplier, has revised its sales forecasts downwards for the second time in just three months. The company attributes this revision to heightened government controls affecting exports to China, which have created significant disruptions in its operations and financial outlook. Consequently, the news sent shockwaves through the market, causing an 11% decline in the company's share prices.
Süss MicroTec disclosed on Wednesday that it is currently grappling with a situation where deliveries worth 23.5 million euros ($24.86 million) are stuck at customs. It's important to note that the company has not reported any changes in the export regulations governing their products. However, customs inspections for shipments to China have seemingly become notably more rigorous since August.
While this development has raised concerns and eyebrows, German customs authorities have yet to provide an official response or clarification regarding these enhanced inspection measures.
This situation reflects a broader trend in Germany's approach to its economic relationship with China. In July, the German government encouraged local businesses to diversify their markets and reduce their dependency on Chinese demand. This strategic move aims to "de-risk" the German economy's relationship with the global superpower, considering the evolving dynamics of international trade and politics.
The uncertainty stemming from these increased export challenges has made it impossible for Süss MicroTec to predict how many of its machines will be successfully delivered to China by the year's end. Notably, the affected goods are particularly lucrative, given the company's status as a small-cap manufacturer of lithography equipment and other critical chipmaking machinery.
Süss MicroTec's revised sales expectations for this year now range between 300 and 340 million euros, compared to the 299.1 million euros reported last year. This represents a more modest increase than initially anticipated. Additionally, the company has adjusted its EBIT (Earnings Before Interest and Taxes) margin outlook, revising it down to 4%-8% from the earlier projection of 9%-11%.
These developments underscore the challenges and uncertainties facing international businesses as they navigate the evolving landscape of global trade, regulatory changes, and geopolitical dynamics. Süss MicroTec's experience serves as a stark reminder of the far-reaching implications that government policies and trade controls can have on the operations and financial prospects of companies operating in the international arena.
