Investors and analysts are expressing skepticism toward ASML (ASML.AS) after the semiconductor equipment giant reduced its financial outlook for 2025, citing weakening demand outside of the artificial intelligence sector and delays in orders.
ASML, Europe’s most valuable technology firm and a crucial supplier to chip manufacturers, finds itself under scrutiny as concerns arise regarding both short-term sales and its ability to sustain long-term growth in a rapidly evolving market. The company’s announcement on Tuesday led to its largest stock selloff in 20 years, with shares plummeting 4.9% to €635.60 by 0840 GMT on Wednesday. This decline comes on the heels of a record high exceeding €1,000 ($1,088) reached in July, a peak driven by ASML’s dominance in the lithography tools market essential for circuit manufacturing.
ASML executives are scheduled to address analysts later on Wednesday. Following a pandemic-driven surge in demand, the company reported that several customers, including producers of logic chips used in smartphones and PCs, have postponed plans for new facilities and upgrades. Additionally, manufacturers of memory chips are also scaling back expansion plans, opting to rely longer on existing equipment.
“There need to be limits to the expectations we investors place on any single company,” remarked Nick Rossolillo of Concinnus Financial, a long-time ASML shareholder. “This is particularly true for an upstream equipment supplier that heavily depends on the capital spending plans of its manufacturing clients.”
While ASML did not disclose specific customers linked to the guidance cut, analysts have focused their attention on TSMC, a key player in AI chip production for Nvidia and smartphone chips for Apple. Michael Roeg, an analyst at Belgian investment bank Petercam Degroof, noted, “The robust sales trends at TSMC may not accurately reflect the overall health of the semiconductor industry.” He emphasized that TSMC’s low capital expenditure this year could continue, as its plant utilization does not align with its seemingly strong sales.
Intel, one of ASML’s logic chip customers, announced in August a $10 billion reduction in capital spending for 2025. Samsung has also indicated difficulties with its factory construction in Texas.
ASML accounts for approximately 25% of chipmakers’ spending on equipment, although some analysts predict that advancements in chipmaking technology may reduce this share. Han Dieperink, chief investment officer at Aureus, suggested that customer delays could serve as leverage in negotiations, potentially leading to pricing concessions from ASML and pressuring its profit margins.
Despite these challenges, ASML remains a cornerstone investment for many, although Aureus trimmed its stake in August due to valuation concerns and noted declining orders from Chinese chipmakers amidst tightening U.S. export restrictions. “China anticipated these restrictions and front-loaded purchases during the 2022-2024 timeframe,” he added.
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