Chip Stocks Plummet Globally After ASML’s Disappointing Sales Forecast
The semiconductor sector took a massive hit on Wednesday as ASML, a leading Dutch chip equipment maker, posted dismal sales forecasts, sending global stocks in the sector tumbling.
European Chipmakers Feel the Pain
ASML’s stock extended its losses into the second day, plummeting 5% at the start of the European trading session. The company’s market capitalization took a staggering $53.6 billion hit in a single day. This downward spiral also dragged other European chipmakers into the red, with ASMI, BE Semiconductor, STMicroelectronics, and Infineon all posting significant losses.
Asian Chipmakers Suffer Even Greater Losses
In Asia, the situation was even more dire. Tokyo Electron, a Japanese semiconductor manufacturing firm, saw its shares nosedive by nearly 10%. Renesas Electronics, Advantest, and Taiwan Semiconductor Manufacturing Company all suffered significant losses, while South Korean chip giant SK Hynix traded 1.6% lower. Samsung Electronics, the world’s largest maker of dynamic random-access memory chips, saw its shares drop 1.9%.
Regional Indexes Take a Hit
The losses in the semiconductor sector had a ripple effect on major indexes, with Japan’s Nikkei 225 losing over 2%, South Korea’s Kospi dipping 0.6%, and the Taiwan Weighted Index sliding 0.7%.
ASML’s Warning Signs
ASML’s CEO warned of cautiousness among customers, citing a “recovery is more gradual than previously expected.” The company’s net bookings for the September quarter came in at 2.6 billion euros, well below the 5.6 billion euro consensus estimate. While net sales beat expectations, the overall outlook remains bleak.
US-China Tensions Add to Woes
The Biden administration’s discussions on limiting sales of advanced AI chips from Nvidia to certain countries further dampened investor sentiment around the semiconductor sector. ASML has faced a tougher business outlook in China due to U.S. and Dutch export restrictions on its shipments. The company’s CFO expects China to account for around 20% of its total revenue for next year, down from 49% in the June quarter.
Challenges Ahead for ASML’s Asia Business
Eugene Hsiao, head of China equity strategy at Macquarie Capital, believes ASML’s business in Asia will face continued headwinds due to broader issues between governments and economic problems. While it makes economic sense for ASML to continue working with China, the challenges ahead will be significant.
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