According to foreign media reports, recently, semiconductor manufacturing equipment company ASML released its financial report showing that its order volume for the first quarter of the year dropped by a staggering 61% quarter-over-quarter, far exceeding expectations and causing market concerns, leading to a general decline in chip stocks on Wednesday.
Following the release of this financial report, semiconductor-related stocks suffered significant losses. Among them, the stock prices of AMD, Nvidia, Intel, and Qualcomm fell by nearly 6%, over 3%, 2%, and more, respectively. The chip technology company Arm was hit the hardest, with its stock price plummeting nearly 12% on Wednesday.
It is worth mentioning that while the overall market only saw a slight drop, the S&P 500 index fell by less than 1%, whereas at the same time, the semiconductor industry index fell by more than 7%, showing the market’s strong reaction to this ASML financial report.
ASML, as the only company in the world capable of supplying the most advanced chip manufacturing machines, with equipment worth hundreds of millions of dollars, has a significant impact on the global semiconductor supply chain. In 2023, the company shipped a total of 449 lithography machines, mainly serving the world’s leading processor foundries, such as TSMC, Samsung, and Intel.
The signals of declining orders revealed in this financial report may indicate a cyclical adjustment in the semiconductor industry. TSMC and Samsung, as ASML’s top two customers, contributed more than half of its sales in 2023, but the report showed a decline in sales, undoubtedly shaking the market. A reduction in purchases by foundries may signal a downturn in the entire industry, further affecting the sales situation of chip companies.
Despite facing short-term pressures, ASML’s CEO Peter Wennink remains optimistic about the future. He stated that as the semiconductor industry recovers from its slump, he expects the market performance in the second half of 2024 to be stronger than in the first half, and considers this year a “transition year” for the company.
Additionally, Wennink revealed that companies building foundries in the United States, such as Intel and TSMC, are expected to increase their orders for lithography machines later this year. Government subsidies, such as the U.S. CHIPS Act, are also expected to boost ASML’s sales. However, the company did not specify the exact impact of export controls to China on its business.
As the global semiconductor market continues to evolve, investors and relevant companies are closely monitoring the future development of this key industry.
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