(Bloomberg) -- ASML Holding NV has lost more than €60 billion ($65.3 billion) in market value since it reported weak orders for its chipmaking machines, forcing investors to reevaluate the health of the industry.
The Dutch company fell as much as 5.8% Wednesday, after plunging 16% — the most in 26 years — the day before. ASML, with a monopoly on machines that produce the highest spec semiconductors, acts as a barometer for the health of companies like Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Corp. The earnings miss triggered a broad selloff in the semiconductor industry.
The results illustrate a split in chipmakers’ fortunes with a surge in demand for semiconductors that can handle complex loads from artificial intelligence programs masking sluggish demand in the rest of the sector. ASML gave few details for why its third-quarter bookings came in at less than half of what analysts had forecast beyond saying some customers had pushed back plant construction.
“While AI-related demand remains robust, recovery in other areas is lagging, and this trend is likely to last until 2025,” Jefferies analyst Janardan Menon said in a note on Wednesday.
Nvidia Corp., the leader in AI accelerators, has said that it can’t produce enough chips to keep up with demand. But companies like Intel and Samsung, which order the company’s most cutting-edge machines, have been struggling of late.
Intel, faced with shrinking sales and mounting losses, is cutting expenses and last month delayed new factories it plans in Germany and Poland. Samsung issued an apology to investors this month for disappointing results after delays let competitors dominate the market for high-bandwidth memory chips used in AI.
But the trouble extends beyond customers seeking top-end equipment. Companies producing automotive and industrial chips, which often use ASML’s less advanced machinery, are also in a prolonged slump because their clients have too much inventory.
Investors will be watching for signs of a broader slowdown when Taiwan-based foundry TSMC, the world’s biggest chipmaker, reports its full third-quarter results on Thursday. While it already disclosed strong sales, TSMC’s profitability and plans for capital expenditure will offer clues to the industry’s health.
TSMC is one of ASML’s biggest customers and supplies companies including Nvidia and Apple Inc.
“We had held concerns about the risk of an even more prolonged recovery in end demand resulting in delays to capacity expansion, and that’s where we now seem to be going into 2025,” analysts at Bernstein said in a note. “It looks like we may need to exercise patience until the cyclical recovery is clearer.”
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