ASML's Forecast Reveals AI-Driven Divide in Semiconductor Industry

ASML shows chasm in chip land: AI winners versus everyone else

There's a growing divide in the $530 billion semiconductor industry between the companies that are riding the artificial intelligence wave and those that aren't. And looking at the early returns from this earnings season, that gulf could soon widen into an abyss. "Without AI, the market would be very sad," Christophe Fouquet, chief executive of ASML Holding, said last week on a conference call after the Dutch chip production equipment maker cut its sales forecast for 2025 due to sluggish demand in everything other than AI. ASML's results sparked a new round of worries about the health of the chip industry, which is being hurt by weakness in key businesses such as personal computers and automobiles. It also has been caught up in the rising geopolitical tensions between the United States and China that could cut off access to the Chinese chip market, which is the biggest in the world.

ASML Shows Chasm in Chip Land: AI Winners Versus Everyone Else

There's a growing divide in the $530 billion semiconductor industry between the companies that are riding the artificial intelligence wave and those that aren't. And looking at the early returns from this earnings season, that gulf could soon widen into an abyss. "Without AI, the market would be very sad," Christophe Fouquet, chief executive of ASML Holding NV, said last week on a conference call after the Dutch chip production equipment maker cut its sales forecast for 2025 due to sluggish demand in everything other than AI.

Chip Stock Selloff Persists After ASML Warns of Slower Recovery

Global chip stocks continued to slump Wednesday after Dutch semiconductor-equipment maker ASML Holding warned the recovery for some areas of the industry would be slower than expected, raising fears among investors of a prolonged downturn in demand. ASML Chief Executive Christophe Fouquet said Tuesday that while demand for artificial intelligence remained strong, other market segments were taking longer than expected to recover as chip makers held back spending on semiconductor-making machinery. The announcement, which came a day earlier than ASML's scheduled release because of a technical error, sparked a global selloff in chip stocks, from Nvidia to Intel and Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker. ASML's own shares in Amsterdam closed more than 15% lower on Tuesday. On Wednesday, ASML stock slumped more than 4% in European morning trading, dragging the rest of the industry. Smaller peer ASM International fell about 1%. Elsewhere in Europe, shares of German chip maker Infineon Technologies fell 1.3%, while Apple supplier STMicroelectronics shed nearly 1%. Meanwhile in Asia, TSMC shares closed 2.3% lower in Taipei. Chip-making equipment maker Tokyo Electron shed more than 9% in Tokyo, while South Korean memory-chip maker SK Hynix, which supplies Nvidia, fell almost 2.2%. Chip makers need highly complex production equipment to build more advanced semiconductors to power AI features in smartphones, laptops and data centers, putting suppliers like ASML at the forefront of the AI-spending bonanza. But while demand for AI semiconductors keeps booming, chip makers are still confronting an inventory glut as manufacturers of consumer devices such as smartphones, laptops, electric vehicles and industrial equipment stockpiled the chips they needed years back and aren't placing as many orders now. ASML booked 2.63 billion euros ($2.86 billion) in orders in the third quarter, up from 2.60 billion euros a year earlier but well below analysts' forecast of 5.59 billion euros, according to consensus estimates by Visible Alpha. The company said 1.4 billion euros in orders were for its high-end extreme ultraviolet tools that are used to print the most intricate layers on chips that are used in the latest gaming consoles, smartwatches and smartphones. Analysts had forecast 2.82 billion euros in EUV orders. ASML now expects between 30 billion and 35 billion euros in sales next year, below a previous forecast of up to 40 billion euros. "It now appears the recovery is more gradual than previously expected," Fouquet said. "This is expected to continue in 2025, which is leading to customer cautiousness."

Chip Stock Selloff Persists in Europe, Asia After ASML Warns of Slower Recovery -- Update

Chip stocks in Europe and Asia continued to fall Wednesday after Dutch semiconductor-equipment maker ASML Holding warned the recovery for some areas of the industry could extend well into next year, raising fears among investors of a prolonged downturn in demand. ASML Chief Executive Christophe Fouquet said Tuesday that while demand for artificial intelligence remained strong, other areas were taking longer than expected to recover as chip makers held back spending on semiconductor-making machinery. The announcement, which came a day earlier than ASML's scheduled release because of a technical error, sparked a global selloff in chip stocks from Nvidia to Intel and Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker. ASML's shares in Amsterdam closed more than 15% lower on Tuesday and 5.1% lower on Wednesday, wiping out more than $60 billion in market value. Several chip stocks in Europe and Asia also ended the day in red territory. Shares of German chip maker Infineon Technologies and France's Soitec closed 0.3% lower, while Dutch company BE Semiconductor Industries closed nearly 1.3% lower. Meanwhile in Asia, TSMC shares closed 2.3% lower in Taipei. Chip-making equipment manufacturer Tokyo Electron shed more than 9% in Tokyo, while South Korean memory-chip maker SK Hynix--which supplies Nvidia--fell almost 2.2%. Chip makers need highly complex production equipment to build more advanced semiconductors to power AI features in smartphones, laptops and data centers, putting suppliers like ASML at the forefront of the AI-spending bonanza. But while demand for AI semiconductors keeps booming, chip makers are still confronting an inventory glut as manufacturers of consumer devices such as smartphones, laptops, electric vehicles and industrial equipment stockpiled the chips they needed years back and aren't placing as many orders now. ASML booked 2.63 billion euros ($2.86 billion) in orders in the third quarter, up from 2.60 billion euros a year earlier but well below analysts' forecast of 5.59 billion euros, according to consensus estimates by Visible Alpha. The company said 1.4 billion euros in orders were for its high-end extreme ultraviolet tools that are used to print the most intricate layers on chips that are used in the latest gaming consoles, smartwatches and smartphones. Analysts had forecast 2.82 billion euros in EUV orders. ASML now expects between 30 billion and 35 billion euros in sales next year, below a previous forecast of up to 40 billion euros. "It now appears the recovery is more gradual than previously expected," Fouquet said. "This is expected to continue in 2025, which is leading to customer cautiousness."

ASML Holding Stock Continues To Slide, Other Chipmakers Bounce Back: 'We Are Still Quite Optimistic About AI' - ASML Holding (NASDAQ:ASML)

"We are still quite optimistic about AI," CEO Christopher Fouquet said on the conference call Wednesday morning. ASML Holding N.V. ASML shares continue to move lower on Wednesday, adding to steep losses from Tuesday after the chip equipment maker cut its full-year outlook. What Happened: ASML shares closed Tuesday down 16% after the company lowered its sales outlook due to weak demand for chips outside of AI. ASML reported third-quarter net sales of 7.5 billion euros ($8.16 billion), beating analyst estimates of 7.12 billion euros, but the Dutch company lowered the high end of its full-year sales guidance from a range of 30 billion euros to 40 billion euros to a new range of 30 billion euros to 35 billion euros. "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. This is expected to continue in 2025, which is leading to customer cautiousness," ASML CEO Christopher Fouquet said in the earnings release. Check This Out: ASML Stock Plunges Further On Lower 2025 Sales Outlook: Analysts Break Down Semiconductor Challenges To make matters worse, the company's quarterly results were accidentally published a day ahead of the scheduled release time. On a conference call with investors and analysts Wednesday morning, Fouquet apologized for the mishap and called it "unfortunate, "according to MarketWatch. The ASML CEO reportedly said on the call that the forecasted weakness in the semiconductor market is expected to mainly impact sales of its less advanced systems in China. He also explained that lower chip demand is primarily coming from the automobile and consumer electronics industries. "We are still quite optimistic about AI," Fouquet said on the call. AI chip leader NVIDIA Corp NVDA fell more than 4% on Tuesday while other chipmakers like Advanced Micro Devices Inc AMD, Intel Corp INTC and Micron Technology Inc MU all faced significant selling pressure. Nvidia was up more than 2% on Wednesday, Micron was up about 4%, AMD was trading narrowly higher and Intel was down about 1% at the time of writing. Bloomberg reported this week that the Biden administration was weighing capping sales of advanced AI chips from Nvidia and other U.S. chipmakers. That report also weighed on chip stocks on Tuesday. ASML Price Action: ASML Holding shares were down 5.86% at $687.61 at the time of publication, according to Benzinga Pro. Photo: Shutterstock. Market News and Data brought to you by Benzinga APIs

ASML Counts On AI-Related Orders to Revive Stock from Summer Dip

After a volatile summer, ASML Holding NV investors are hoping that its earnings report will underline the chip equipment maker's strong credentials as an artificial intelligence trade with further to run. Shares in Europe's most valuable technology company have fallen about 20% since a July high, hurt by the prospect of more severe US restrictions on its business in China as well as a broader rotation out of the sector this summer. Those factors overshadowed estimate-beating orders for ASML's machines and ended an AI-fueled rally that had seen the shares almost double in value since the start of 2023.

Chip stocks hit by market rout after ASML's revised outlook By Invezz

Invezz.com - Investors in the semiconductor sector are facing renewed uncertainty following a sobering outlook from ASML Holding NV (LON:0QB8), one of the world's leading chip equipment manufacturers. The Dutch company's revised forecast triggered a sharp decline in global chip stocks, with combined losses exceeding $420 billion across US-traded chipmakers and leading Asian semiconductor companies. ASML (AS:ASML) slashes sales forecast for 2025 ASML, known for producing the most advanced chipmaking equipment, cut its 2025 net sales outlook, citing sluggish demand outside of artificial intelligence (AI) sectors. The company reduced its upper guidance range for 2025 net sales to €35 billion ($38 billion), down from €40 billion. The revision came as a surprise to many investors, particularly in light of the recent rebound in semiconductor stocks fueled by strong AI demand and Nvidia (NASDAQ:NVDA) Corp.'s latest product performance. ASML's shares plummeted by as much as 1998 in European trading following the announcement, marking one of its sharpest declines in decades. The ripple effect of ASML's revised forecast was felt across the semiconductor industry, with Tokyo Electron Ltd. falling by as much as 10% in Asian markets, and Taiwan Semiconductor Manufacturing Co. (TSMC) losing 3.3% ahead of its earnings report. While ASML's weak 2025 forecast was partly anticipated due to softness in non-AI sectors and reduced spending from companies like Intel Corp (NASDAQ:INTC)., the scale of the downward revision took analysts by surprise. Citigroup analyst Atif Malik highlighted the "magnitude of the correction" as an unexpected negative factor for investors. Despite the steep market reaction, some analysts remain cautiously optimistic, pointing out that ASML's challenges may be specific to the company. Jung In Yun, CEO of Fibonacci Asset Management Global Pte., believes the drop in ASML's earnings may be due to strategic order reductions by key chipmakers, though the underlying reasons remain unclear. He also noted that ongoing economic stimulus efforts by China could potentially boost chip demand and help revive the market. Although the semiconductor industry has faced headwinds in areas outside AI, demand for AI-driven technologies continues to support key chipmakers like Nvidia. The company recently reached a new record stock price following positive developments in its AI product line, which has helped to offset some of the broader industry concerns. Nvidia and other AI-focused chipmakers are expected to maintain solid growth in the near term, even as other segments experience slower demand. The broader semiconductor industry, however, remains vulnerable to economic shifts and fluctuating demand across various sectors. Slowing demand in non-AI applications, coupled with reduced capital expenditures from some of the industry's largest players, is likely to pose ongoing challenges for manufacturers like ASML. The focus now turns to Taiwan Semiconductor Manufacturing Co.'s earnings report, which could provide further insights into the health of the chip market. Despite these challenges, many analysts believe the semiconductor industry's long-term growth prospects remain intact, particularly as AI applications and digital transformation efforts drive demand for cutting-edge technology.

ASML blows up the stock market's gold mine

ASML's recent forecast has sent ripples through the stock market, hinting at potential overcapacity in chip factories. These factories, having stocked up on ASML's costly machines during the pandemic, are now better equipped to churn out more chips, some analysts suggest. ASML shares plummeted by 16% in a single session, marking a record-breaking drop in its 26-year history. ASM International, a fellow Dutch company, wasn't spared either, with its shares falling by 14%. The drama intensified when ASML's results were accidentally released during trading hours, instead of the scheduled 7:00 am announcement. ASML projected total net sales of 30 to 35 billion euros for 2025, falling short of the market's 36 billion euro expectation. The gross margin forecast, at best 53%, also missed the consensus of 53.9%. Jefferies analyst William Beavington expressed surprise at the weak third-quarter orders, stating, "I don't know anyone, anywhere, who thought such a low figure was possible." He also urged caution regarding orders from China, which might decline more rapidly than anticipated. Spurred on by strong demand for chips during the pandemic, manufacturers increased their production capacity. This growth stabilized as supply chains eased, allowing them to wait to order new tools until their factories seemed ready to overflow with orders. According to analysts, ASML's forecasts are a belated indicator of what has been going on for months in these chip factories. The company said in a press release that, despite the boom in artificial intelligence chips, other sectors of the semiconductor market remained weaker than expected, leading companies to focus on their core business.seen, leading companies making logic chips to delay orders and customers making memory chips to expect only "limited" increases in production capacity. 81% utilization rate According to Dan Hutcheson, Vice President of analyst firm TechInsights, Intel, TSMC and Samsung are reducing their orders with ASML because they have realized that capacity is sufficient. The chip fab utilization rate is around 81% this year, but manufacturers tend to buy tools when that rate reaches the mid-90% range, Hutcheson said. Intel has slowed factory expansion, suggesting that Samsung and TSMC will also be cautious. Chip inventories remain high, and chipmakers have become more efficient with ASML tools, meaning they can make more chips without having to order more. "In the long term, we'll be fine" Handel Jones, CEO of International Business Strategies, which tracks developments in the chip manufacturing industry, has reduced the number of stages in which ASML's flagship machines are used, sometimes by as much as a third. According to Jones, Samsung, for example, might be able to use advanced chip etching technology to reduce the number of stages in which ASML's flagship machines are used from five or six to one or two. If successful, Samsung could have significant excess capacity for these machines, known as extreme ultraviolet lithography machines. Jones said he had not changed any of his overall chip industry forecasts, which predict booming demand for AI chips and AI-specific memory chips. "This is a short-term incident. In the long term, we'll be fine," said Jones.

ASML shares rise ahead of quarterly earnings report

Dutch chip equipment manufacturer ASML is set to release its third-quarter earnings on 16 October. Analysts are anticipating robust growth in its bookings, driven by strong demand for AI chips. Shares of ASML increased by 2.8% on Monday, in advance of its third-quarter earnings report, due on Wednesday. This rise followed a broader rally in artificial intelligence-related stocks, signalling optimism from investors about the sustained demand for AI chips. According to forecasts from several research firms, the Dutch chip equipment maker is expected to report solid revenue growth and bookings. However, ASML has underperformed compared to its global peers this year, largely due to concerns over China, Intel, and memory chip demand. These factors led some institutions, such as Morgan Stanley and UBS, to downgrade the stock. ASML's shares are up 16% year-to-date, in contrast to the 32% rise in Applied Materials and the 89% surge in Taiwan Semiconductor Manufacturing Co. (TSMC). Some analysts believe that shares in Europe's largest tech company are undervalued, considering its pivotal role in the AI chip supply chain. Below are key metrics to watch in ASML's upcoming earnings results. ASML's primary product is Extreme Ultraviolet Lithography (EUV) technology, which is essential in manufacturing microchips. EUV lithography allows for the production of smaller, more powerful, and energy-efficient chips, and its sales are expected to grow further due to strong demand for advanced AI chips in the third quarter. According to Visible Alpha, ASML is forecast to report bookings of €5.59bn in the third quarter, more than double the figure from the same quarter last year, though flat compared to the second quarter. EUV products are expected to contribute €2.82bn in orders. Revenue is forecast to reach €7.12bn, representing a 6.7% increase year-on-year. The gross margin is expected to be 50.8%, slightly lower than the 51.9% reported previously. These forecasts align with the upper end of ASML's guidance, which included net sales estimates of between €6.7bn and €7.3bn, with a gross margin ranging from 50% to 51%. These figures suggest ASML will return to growth after two consecutive quarters of decline. ASML has a strong track record of exceeding estimates, with the exception of 2019. Therefore, another earnings beat would bolster confidence in the company's growth trajectory. However, the outlook for the fourth quarter and the full year will play a crucial role in determining the future direction of ASML's share price. During the second-quarter earnings call, CEO Christophe Fouquet described 2024 as a "transition" year, and he expects the semiconductor industry to continue its recovery in the second half of the year. He stated, "We currently see strong developments in AI, driving most of the industry's recovery and growth, ahead of other market segments... The industry expects to be in a cyclical upturn in 2025. As a result, we need to prepare for a number of new fabs being built today across the globe." There are several concerns regarding ASML's future growth. US restrictions on chip exports to China may continue to affect the outlook for AI demand, compounded by slower economic growth in China, the world's second-largest economy. China accounted for 49% of ASML's total sales in the first half of the year, up from 39% in the final quarter of 2023. Sales in China could be impacted by US export restrictions aimed at limiting China's technological advancements for military purposes, framed as "national security" measures. Last month, the Dutch government, in collaboration with the US, imposed further restrictions on ASML's chip exports to China. Under the new policy, ASML must obtain a licence to provide spare parts and software updates for chip-making equipment sold to China. Analysts have also pointed out that demand in China may weaken due to overcapacity issues with ASML's less advanced AI chips. Additionally, Intel has paused its plans to expand in Germany for two years as part of its cost-cutting measures, which could negatively impact ASML's sales revenue. However, this may be offset by strong demand from ASML's largest customer, TSMC. Analysts at Jeffries believe TSMC could be the largest driver of ASML's EUV sales in the third quarter.

Asia chip stocks fall tracking ASML losses; TSMC earnings on tap By Investing.com

Investing.com-- Asian chipmaking stocks fell on Wednesday after industry bellwether ASML provided a weak sales forecast for 2025, with focus now turning to upcoming earnings from Taiwan's TSMC. Losses in Asian stocks came tracking an over 16% slide in ASML's (AS:ASML) (NASDAQ:ASML) U.S. shares on Tuesday, after the photolithography equipment maker posted a weaker-than-expected sales outlook for 2025. While the firm's September quarter earnings still beat expectations on strong demand from artificial intelligence, ASML said that demand from sectors outside AI was weakening, and was likely to weigh on overall sales. The company is the only major supplier of advanced chipmaking equipment in the world, and acts as a bellwether for the broader industry. ASML's outlook saw market darling NVIDIA Corporation (NASDAQ:NVDA) sink more than 4%. Chip stocks were also pressured by a report that the U.S. was planning to impose a limit on the sale of AI chips to select countries, specifically in the Gulf and Middle East. Focus was now squarely on TSMC's (TW:2330) (NYSE:TSM) third-quarter earnings report, due on Thursday. The world's biggest contract chipmaker is expected to clock a 40% jump in its quarterly profit, a Reuters survey showed, citing strong demand for chips used in AI applications. But while TSMC has benefited from increased AI demand over the past year, the chipmaker has also warned that demand from applications outside AI may prove to be weak. Still, monthly figures showed TSMC clocked third-quarter revenue of T$759.69 billion ($23.62 billion), higher than Reuters estimates of T$750.36 billion. TSMC's Taipei shares fell about 1%, tracking losses in their regional peers.