Semiconductor Stocks Plunge: ASML Forecasts and U. S. Export Caps Spook Markets

Asian chip stocks took a hit on Wednesday, with investors reacting to disappointing sales forecasts from ASML, a major Dutch semiconductor equipment maker. The news sent ripples through the global market, with significant drops recorded across the board. Japanese semiconductor giant Tokyo Electron saw its shares plummet by nearly 10%, while other key players like Renesas Electronics and Advantest also experienced notable declines. In Taiwan, both Taiwan Semiconductor Manufacturing Company and Hon Hai Precision Industry (Foxconn) felt the impact, with drops of 3. 3% and 1. 6%, respectively. South Korea wasn't spared either, with SK Hynix and Samsung Electronics seeing their shares dip by 1. 6% and 1. 9%, respectively. This gloomy outlook was triggered by ASML's revised sales forecast for 2025, which was set between €30 billion and €35 billion ($32. 7 billion to $38. 1 billion). This was at the lower end of their previous estimates. Their third-quarter net bookings also missed expectations, coming in at €2. 6 billion ($2. 83 billion) compared to the €5. 6 billion consensus estimate. However, net sales did manage to beat expectations, reaching €7. 5 billion. ASML's CEO warned about a cautious market and a slower-than-expected recovery. Following ASML's slide of 16%, other global chipmakers like Nvidia and AMD also saw significant drops of 4. 7% and 5. 2%, respectively. Adding to the tension, news broke that the Biden administration was considering limiting sales of advanced AI chips from Nvidia for national security reasons. This added to the sector's woes, dampening investor sentiment further. ASML has been facing challenges in the Chinese market due to U. S. and Dutch export restrictions. The company's CFO, Roger Dassen, predicted that China would account for around 20% of ASML's total revenue next year, down from the 49% reported in the previous quarter. Overall, the semiconductor sector in Asia took a beating, with major indexes like Japan's Nikkei 225, South Korea's Kospi, and Taiwan's Weighted Index all suffering losses.