The semiconductor sector is facing a tough day, with chip stocks in both the United States and Asia taking a hit following ASML’s unexpected forecast downgrade. The Dutch chip equipment manufacturer revealed disappointing sales figures, particularly in non-AI segments, raising concerns about a slowdown in overall chip demand. Adding to the tension, reports surfaced that the Biden administration is contemplating export caps on advanced AI processors to certain countries, primarily due to national security concerns.
In a dramatic market shift, Nvidia—once the world’s most valuable company—saw its stock plummet by 4.5%, wiping out approximately $158 billion from its market cap. This drop widened the gap between Nvidia and Apple, which boasts a market value of $3.56 trillion.
Other semiconductor giants felt the sting as well, with companies like AMD, Intel, Arm, Broadcom, and Micron experiencing declines ranging from 3.2% to 5%. The Philadelphia SE Semiconductor Index suffered nearly a 5% drop, further weighing on the Nasdaq index.
ASML’s U.S.-listed shares tumbled by 16% after the company accidentally published results ahead of schedule. The report indicated weak bookings and a cautious outlook, suggesting a slower recovery for chip demand outside the AI sector. “ASML’s premature release isn’t alarming in isolation, but the underlying news is far from reassuring for investors,” noted Derren Nathan, head of equity research at Hargreaves Lansdown.
Asian chipmakers also felt the fallout. Taiwan Semiconductor Manufacturing Co. (TSMC) slipped by 1.9%, Samsung Electronics dipped 2.1%, and SK Hynix fell by 2.5%. Samsung recently cautioned that its third-quarter profits would fall short of market expectations, struggling to capitalize on the AI chip demand. In contrast, TSMC, a key supplier to AI leader Nvidia, is projected to announce a remarkable 40% increase in its third-quarter profits.
On the geopolitical front, Bloomberg News reported that U.S. officials are considering restrictions on export licenses for AI chips to certain countries, particularly in the Persian Gulf region. This move stems from rising concerns that these nations could serve as conduits for China to acquire advanced American chips that are otherwise restricted.
“The U.S. is keen to maintain its lead in the AI revolution, which is poised to enhance productivity and drive technological innovation,” commented Danni Hewson, head of financial analysis at AJ Bell.
As the semiconductor market grapples with these developments, investors and industry watchers alike are left questioning the future trajectory of chip demand amid the complexities of AI and international trade.
