Investors in the semiconductor sector are facing renewed uncertainty following a sobering outlook from ASML Holding NV, one of the world’s leading chip equipment manufacturers.
The Dutch company’s revised forecast triggered a sharp decline in global chip stocks, with combined losses exceeding $420 billion across US-traded chipmakers and leading Asian semiconductor companies.
ASML slashes sales forecast for 2025
ASML, known for producing the most advanced chipmaking equipment, cut its 2025 net sales outlook, citing sluggish demand outside of artificial intelligence (AI) sectors.
The company reduced its upper guidance range for 2025 net sales to €35 billion ($38 billion), down from €40 billion.
The revision came as a surprise to many investors, particularly in light of the recent rebound in semiconductor stocks fueled by strong AI demand and Nvidia Corp.’s latest product performance.
ASML’s shares plummeted by as much as 1998 in European trading following the announcement, marking one of its sharpest declines in decades.
The ripple effect of ASML’s revised forecast was felt across the semiconductor industry, with Tokyo Electron Ltd. falling by as much as 10% in Asian markets, and Taiwan Semiconductor Manufacturing Co. (TSMC) losing 3.3% ahead of its earnings report.
Mixed reactions from investors
While ASML’s weak 2025 forecast was partly anticipated due to softness in non-AI sectors and reduced spending from companies like Intel Corp., the scale of the downward revision took analysts by surprise.
Citigroup analyst Atif Malik highlighted the “magnitude of the correction” as an unexpected negative factor for investors.
Despite the steep market reaction, some analysts remain cautiously optimistic, pointing out that ASML’s challenges may be specific to the company.
Jung In Yun, CEO of Fibonacci Asset Management Global Pte., believes the drop in ASML’s earnings may be due to strategic order reductions by key chipmakers, though the underlying reasons remain unclear.
He also noted that ongoing economic stimulus efforts by China could potentially boost chip demand and help revive the market.
AI demand remains strong despite broader chip concerns
Although the semiconductor industry has faced headwinds in areas outside AI, demand for AI-driven technologies continues to support key chipmakers like Nvidia.
The company recently reached a new record stock price following positive developments in its AI product line, which has helped to offset some of the broader industry concerns.
Nvidia and other AI-focused chipmakers are expected to maintain solid growth in the near term, even as other segments experience slower demand.
Challenges ahead for chipmakers
The broader semiconductor industry, however, remains vulnerable to economic shifts and fluctuating demand across various sectors.
Slowing demand in non-AI applications, coupled with reduced capital expenditures from some of the industry’s largest players, is likely to pose ongoing challenges for manufacturers like ASML.
The focus now turns to Taiwan Semiconductor Manufacturing Co.’s earnings report, which could provide further insights into the health of the chip market.
Despite these challenges, many analysts believe the semiconductor industry’s long-term growth prospects remain intact, particularly as AI applications and digital transformation efforts drive demand for cutting-edge technology.
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