Chip stocks fall as ASML's bleak Q3 order outlook dims
ASML's pessimistic outlook for Q3 orders has led to a decline in chip stocks.
TroibNews 
Semiconductor stocks in both the United States and Asia experienced declines after ASML, a chip equipment maker, revised its annual sales forecast downward due to sluggish demand for non-AI chips.
Nvidia, the AI chip powerhouse that had briefly overtaken Apple as the world’s most valuable company just a day earlier, saw a drop of 4.5 percent, which translated to a loss of approximately $158 billion in market capitalization. This shift further expanded the disparity with Apple's valuation of $3.56 trillion.
Other semiconductor companies, including AMD, Intel, Arm, Broadcom, and Micron, also faced losses ranging from 3.2 percent to 5 percent at the close on Tuesday. This collective downturn contributed to a nearly 5 percent decline in the Philadelphia SE Semiconductor Index and adversely impacted the Nasdaq index.
Shares of ASML listed in the U.S. fell by 16 percent after the Dutch firm released its results ahead of schedule—an apparent mistake—showing weak bookings and a lowered forecast, alongside an indication that the recovery in chip demand outside the AI sector is slower than anticipated.
Despite the heightened demand for AI-related chips, ASML noted that other sectors of the semiconductor market remain weaker than expected, with logic chip manufacturers postponing orders and memory chip producers planning only "limited" new capacity expansions.
Asian chipmakers, many of which are ASML's customers, also reported declines in their stock prices on Wednesday. Taiwan Semiconductor Manufacturing Co. slipped by 2.3 percent, Samsung Electronics fell by 2.5 percent, and SK Hynix was down by 2.2 percent.
In the wake of surging demand for chips during the pandemic, chipmakers had hurried to expand their production capacity. However, as supply chains began to stabilize, they have adopted a more cautious approach, delaying new equipment orders until they see substantial demand for their products.
Analysts pointed out that ASML's forecast serves as a lagging indicator of the ongoing situation in semiconductor factories, which has been developing for several months.
Earlier this month, Samsung cautioned that its third-quarter profit would fall short of market expectations while it attempts to leverage the demand for AI chips.
On the other hand, TSMC, a competitor to Samsung and a significant supplier to AI leader Nvidia, is projected to report a remarkable 40 percent increase in third-quarter profit on Thursday.
Rohan Mehta contributed to this report for TROIB News
Nvidia, the AI chip powerhouse that had briefly overtaken Apple as the world’s most valuable company just a day earlier, saw a drop of 4.5 percent, which translated to a loss of approximately $158 billion in market capitalization. This shift further expanded the disparity with Apple's valuation of $3.56 trillion.
Other semiconductor companies, including AMD, Intel, Arm, Broadcom, and Micron, also faced losses ranging from 3.2 percent to 5 percent at the close on Tuesday. This collective downturn contributed to a nearly 5 percent decline in the Philadelphia SE Semiconductor Index and adversely impacted the Nasdaq index.
Shares of ASML listed in the U.S. fell by 16 percent after the Dutch firm released its results ahead of schedule—an apparent mistake—showing weak bookings and a lowered forecast, alongside an indication that the recovery in chip demand outside the AI sector is slower than anticipated.
Despite the heightened demand for AI-related chips, ASML noted that other sectors of the semiconductor market remain weaker than expected, with logic chip manufacturers postponing orders and memory chip producers planning only "limited" new capacity expansions.
Asian chipmakers, many of which are ASML's customers, also reported declines in their stock prices on Wednesday. Taiwan Semiconductor Manufacturing Co. slipped by 2.3 percent, Samsung Electronics fell by 2.5 percent, and SK Hynix was down by 2.2 percent.
In the wake of surging demand for chips during the pandemic, chipmakers had hurried to expand their production capacity. However, as supply chains began to stabilize, they have adopted a more cautious approach, delaying new equipment orders until they see substantial demand for their products.
Analysts pointed out that ASML's forecast serves as a lagging indicator of the ongoing situation in semiconductor factories, which has been developing for several months.
Earlier this month, Samsung cautioned that its third-quarter profit would fall short of market expectations while it attempts to leverage the demand for AI chips.
On the other hand, TSMC, a competitor to Samsung and a significant supplier to AI leader Nvidia, is projected to report a remarkable 40 percent increase in third-quarter profit on Thursday.
Rohan Mehta contributed to this report for TROIB News
