Microchip stocks tumble amid ASML’s weak forecast

Concerns over the global semiconductor market deepened as chip stocks, including Nvidia and AMD, fell sharply following ASML’s cut in its annual sales forecast.
ASML’s downgraded sales forecast has sent semiconductor stocks tumbling amid concerns of oversupply.

Chip stocks took a sharp hit after ASML, a leading chip equipment maker, lowered its annual sales forecast due to weak demand for non-AI chips. This downturn raised concerns about the broader semiconductor market, even as AI-related chips remain in high demand. Nvidia, a major player in the AI chip sector, saw its stock drop 4.5%, erasing $158 billion in market value, while other key chipmakers like AMD, Intel, and Micron also saw declines.

ASML’s early results revealed a slowdown in bookings and delayed orders from logic chip manufacturers, as well as limited new capacity plans from memory chip makers. This caused US and Asian semiconductor stocks to slide, with the Philadelphia Semiconductor Index down nearly 5%. Despite growth in AI chips, the overall chip market remains under pressure, with many factories holding off on new equipment purchases as demand stabilises.

The chip industry had expanded rapidly during the pandemic, but now faces a period of slower recovery outside the AI segment. Adding to the uncertainty, US officials are considering restrictions on exporting AI chips to certain countries over national security concerns, further complicating the outlook for the sector.