Investors in chip stocks are facing a fresh gut check after a tepid outlook from key equipment supplier ASML Holding NV sparked a global rout in the sector.
Combined market value losses for an index of US-traded chipmakers plus the largest Asian stocks reached more than US$420 billion. Shares in ASML yesterday extended losses, falling 5 percent in Amsterdam, after plunging 16 percent the previous day.
The warning from Netherlands-based ASML halted a rally that had pushed a gauge of US-traded shares to a three-month high. Nvidia Corp sank nearly 5 percent on Tuesday in New York, after reaching a record close earlier this week on reduced concern over production issues with its newest artificial intelligence (AI) product.
Photo: Reuters
ASML’s shares on Tuesday tumbled by the most since 1998 after the manufacturer of the world’s most advanced chipmaking machines cut its outlook on sluggishness in areas beyond AI. It lowered the top end of its guidance range for next year’s total net sales to 35 billion euros (US$38.14 billion) from 40 billion euros.
While a weak forecast for next year was expected from ASML given slowness in non-AI applications as well as reduced spending by Intel Corp and other factors, “the magnitude of the correction is a negative surprise,” Citigroup Inc analyst Atif Malik wrote in a note.
Exacerbating the situation was the lack of accompanying color as the results were released mistakenly a day earlier than scheduled.
ASML published the release prematurely “due to a technical error,” it said in a statement.
The company was yesterday to hold a call with investors at 3pm in Amsterdam.
Tuesday’s collapse in the share price of ASML erased about 50 billion euros from the company’s market value. That places it among Europe’s five biggest single-day market capitalization wipeouts ever. It ranks alongside the plunges recorded by Nokia Oyj and Vodafone Group PLC when the Internet bubble burst some 25 years ago.
Losses in Asian trading yesterday were led by ASML peers including Tokyo Electron Ltd, which fell 9.2 percent, while Lasertec Corp, which makes equipment to inspect chips, lost 13.4 percent in Tokyo.
Shares of top foundry Taiwan Semiconductor Manufacturing Co (台積電), which is today to report third-quarter results, ended 2.34 percent lower in Taipei, while shares in Samsung Electronics Co and SK Hynix Inc closed down 2.46 percent and 2.18 percent respectively in Seoul.
Despite the market reaction, some investors see ASML’s woes as possibly specific to the Dutch company. AI demand remains brisk and Beijing’s efforts to revive its economy are seen helping a broader recovery.
“We believe chipmakers are strategically reducing orders for ASML, and this is negatively affecting ASML’s earnings,” Fibonacci Asset Management Global Pte chief executive officer Jung In-yun said.
Whether the driver is cost-cutting or other strategic reasons is unclear, he said, adding that stimulus from China might spur a rebound in chip demand.
Taiwan’s foreign exchange reserves fell below the US$600 billion mark at the end of last month, with the central bank reporting a total of US$596.89 billion — a decline of US$8.6 billion from February — ending a three-month streak of increases. The central bank attributed the drop to a combination of factors such as outflows by foreign institutional investors, currency fluctuations and its own market interventions. “The large-scale outflows disrupted the balance of supply and demand in the foreign exchange market, prompting the central bank to intervene repeatedly by selling US dollars to stabilize the local currency,” Department of Foreign
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
RSS