After the lukewarm prospects of key equipment supplier ASML triggered a global chip stock crash, chip stock investors are facing new tests.
The total market value loss of the chip manufacturer index traded in the United States, along with the largest Asian stocks, exceeded $420 billion (approximately RMB 3 trillion).
The warning issued by ASML, headquartered in the Netherlands, poured cold water on the stock prices that rebounded from the summer sell-off. Earlier this week, concerns about production issues with Nvidia's latest artificial intelligence (AI) products decreased, helping the leading chip manufacturer's stock price reach a new high.
ASML's stock price in Europe has fallen the most since 1998, after the world's most advanced chip manufacturing equipment manufacturer lowered its expectations for weak development in areas other than AI. The company has lowered the upper limit of its guidance range for total net sales in 2025 from 40 billion euros to 35 billion euros (38 billion US dollars).
Citigroup analyst Atif Malik wrote in a report, "Given the slowdown in non AI applications and Intel's reduced spending, ASML's weak performance expectations for 2025 are expected
In Wednesday's Asian trading, peers including TEL led the decline, with a drop of up to 10%. TSMC, the top contract manufacturer that released its financial report on Thursday, saw its stock price drop by 3.3%.
Despite the enthusiastic market response, some investors believe that ASML's predicament may be unique to this Dutch company. AI demand is still strong, and Chinese Mainland's efforts to revitalize the economy are believed to contribute to a broader economic recovery.
Jung In Yun, CEO of Fibonacci Asset Management Global Pte., said: "We believe that chip manufacturers are strategically reducing their orders to ASML, which has a negative impact on ASML's profitability." He said that it is not clear whether the driving factor is cost cutting or other strategic reasons. He also pointed out that the stimulus measures in Chinese Mainland may stimulate the rebound of chip demand.
