Staff at Carl Zeiss ZMT are seen outside giant vacuum chambers where optical systems for ASML’s latest High NA EUV tool are tested.
ASML
Chip stocks fell on Wednesday after ASML, a key developer of semiconductor manufacturing equipment, said that bookings fell by 61% sequentially throughout the first quarter, a steeper drop than investors had expected.
During trading on Wednesday, AMD’s stock fell over 4%, Nvidia shares fell about 3%, Intel shares fell nearly 2% and Qualcomm was off 2%. But the largest drop affected chip technology firm Arm, which was trading nearly 10% lower on Wednesday.
ASML fell over 8% on a day when all the S&P 500 index was only down lower than 1%.
ASML is actually the one supplier of machines which might be needed to construct probably the most advanced chips on the earth, which frequently cost a whole bunch of hundreds of thousands of dollars each. The Dutch company shipped 449 “lithography” machines in 2023, and its essential customers include the world’s top processor foundries: TSMC, Samsung and Intel.
Its top two customers accounted for over half of its 2023 sales. Sales were down in Taiwan and South Korea, where TSMC and Samsung are based, respectively.
Foundries physically manufacture the chips that firms like Nvidia or Apple design, so any sign that they’re buying less equipment could suggest a downturn within the deeply cyclical semiconductor industry, which could then impact the sales of chip firms to finish customers. And since licensing firms comparable to Arm book just a few cents of revenue each time a chip is made using their technology, fewer sales of producing machines could signal fewer chips coming to market overall.
Total bookings for ASML’s machines fell 4% year-over-year, and CEO Peter Wennink said in a press release that he expects the second half of 2024 to be stronger than the primary half because the semiconductor industry manages a “recovery from the downturn,” adding that the corporate was in a “transition 12 months.”
“You recognize it’s pretty clear that there is just a few there’s just a few usual suspects absent within the the order intake,” Wennink said on a call with analysts.
Wennink will retire at the top of the month, he said on the earnings call. He can be replaced by Christophe Fouquet, current chief business officer.
Wennink said that he expected firms constructing foundries within the U.S., comparable to Intel and TSMC, to place in additional orders for lithography machines later this 12 months. ASML also said that it expected that government subsidies for chip factories, comparable to the CHIPS Act within the U.S., would boost its sales. The corporate didn’t say how export controls on China were affecting its business.
“For those who take a look at the announced plans of a few of our larger customers, it’s pretty clear that in the following couple of quarters, significant orders must are available,” Wennink said.
