The global semiconductor market faced a significant downturn as ASML, a leading chip equipment manufacturer, slashed its annual sales forecast for Q3. This pessimistic outlook stems from a decline in demand for non-AI chips, causing ripple effects across the industry.
In the wake of ASML’s announcement, major chip stocks in the United States and Asia took a hit. Nvidia, previously the world’s most valuable company, saw its stock plummet by 4.5%, wiping out approximately $158 billion in market value. Other key players such as AMD, Intel, Arm, Broadcom, and Micron also experienced declines ranging from 3.2% to 5%, leading the Philadelphia SE Semiconductor Index to drop nearly 5% and dragging the Nasdaq index lower.
ASML’s shares closed 16% down after the Dutch company reported weaker bookings and a slower recovery in chip demand outside the AI sector. Despite the booming demand for AI-related chips, other segments remain sluggish. Logic chip makers are postponing orders, and memory chip manufacturers are only planning limited capacity additions.
The downturn also affected Asian chipmakers, with Taiwan Semiconductor Manufacturing Co. (TSMC) down 2.3%, Samsung Electronics falling 2.5%, and SK Hynix declining 2.2%. These companies are among ASML’s customers and have felt the impact of the revised forecasts.
During the pandemic, semiconductor firms rapidly expanded their capacity to meet skyrocketing demand. However, as supply chains normalized, these companies are now cautious, waiting to see if factory orders will surge before investing in new tools. Analysts view ASML’s forecast as a lagging indicator of the ongoing challenges in the chip manufacturing sector.
Adding to the mixed signals, Samsung has warned that its third-quarter profits may fall below market expectations due to difficulties in capitalizing on AI chip demand. In contrast, TSMC, which counts Nvidia as a major customer, is anticipating a 40% increase in third-quarter profits, highlighting a varied outlook within the industry.
Reference(s):
cgtn.com
