“.. Chipmakers are experiencing strangely uneven times. .. companies like $NVDA are blowing down the doors .. But in other sectors, including automotive and industrial, the industry has been in a prolonged slump ..”$ASML https://t.co/HCqTxOQ3O2 pic.twitter.com/7vWL5ePbQf
— Carl Quintanilla (@carlquintanilla) October 15, 2024
ASML, a leading supplier of advanced lithography equipment for making semiconductors, saw its stock plummet 16.3% to close at 730.43 on Tuesday after reporting disappointing third-quarter bookings and lowering its 2025 guidance. The company’s CEO, Christophe Fouquet, stated, “While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected.”
The news sent shockwaves through the semiconductor industry, with the Philadelphia semiconductor index, known as SOX, dropping 5.3%.
OUCH! ASML’s reduced sales forecast and 3Q booking miss sink semiconductor stocks. Semiconductor index Sox down 4% w/ASML down 13.4%. pic.twitter.com/EKgUzF05dL
— Holger Zschaepitz (@Schuldensuehner) October 15, 2024
Other semiconductor equipment makers, such as Applied Materials and Lam Research, fell 10.7% and 10.9%, respectively.
Combined market value losses for an index of US-traded chipmakers plus the largest Asian stocks reached more than $420 billion.
Investors in chip stocks are facing a fresh gut check after a tepid outlook from key equipment supplier ASML https://t.co/qy7yHANZjd— Joumanna Nasr Bercetche (@JoumannaTV) October 16, 2024
Major semiconductor stocks like Nvidia, AMD, and Intel also retreated, with Nvidia falling 5%, AMD sliding 5.2%, and Intel dropping 3.5%. Chip designer Arm Holdings tanked 6.9%.
ASML reported bookings of 2.6 billion euros ($2.8 billion), well below consensus expectations of 5.4 billion euros ($5.9 billion). The company earned the equivalent of $5.80 a share on sales of $8.21 billion in the third quarter, beating analysts’ expectations of $5.36 a share on sales of $7.87 billion. However, the disappointing bookings and lowered 2025 guidance overshadowed the decent Q3 results.
ASML guidance shocks semiconductor market
The company guided to fourth-quarter revenue of 8.8 billion to 9.2 billion euros, with the midpoint translating to $9.8 billion, matching views. ASML also reduced its revenue outlook for 2025 to the lower half of its range of 30 billion to 40 billion euros, having previously guided to the upper half of that range.
The announcement from ASML follows broader industry concerns, including a statement from the Cybersecurity Association of China (CSAC) regarding U.S.-based Intel. The CSAC has indicated that Intel products sold in China should undergo a security review, citing allegations that the American chipmaker has continually posed risks to China’s national security and interests. Asian and European chip stocks fell on Wednesday in response to ASML’s disappointing sales forecasts.
In Asia, Japan’s Tokyo Electron logged the biggest losses, dropping nearly 10%, while in Europe, ASML stock fell for a second day, losing 4% of its value. Other European semiconductor firms, such as ASMI, BE Semiconductor, STMicroelectronics, and Infineon, also experienced declines. ASML’s business in Asia is likely to face continued headwinds, according to Eugene Hsiao, head of China equity strategy at Macquarie Capital.
While it makes economic sense for ASML to continue working with China, there are broader issues between governments going into economic problems.
