ASML caught fire, global chip stocks affected?
ASML's new orders in the first quarter were far below expectations, dragging down global chip stocks. ASML explained that the decline in orders was mainly due to a decrease in demand for the most advanced EUV lithography machines. This impact caused ASML's stock price to fall by 7.09%. Other chip stocks were also affected, with Micron Technology, Broadcom, Qualcomm, Intel, and Arm all experiencing declines in their stock prices. Analysts believe that chip stocks may experience volatility. Furthermore, the decrease in ASML orders also serves as a reminder that many industries, apart from artificial intelligence technology, are still facing challenges of slowing demand
ASML, the highest market value technology company in Europe, saw a sharp decline in new orders in the first quarter, with a quarter-on-quarter decrease of 61%, dragging down chip stocks in Europe and the United States.
On April 17th, ASML announced in its financial report that the company's new order value for the first quarter was 3.61 billion euros, far below the market's expected 5.1 billion euros. Previously, the order value in the fourth quarter of 2023 reached a record 9.19 billion euros. ASML explained in the financial report that the decline in new orders was mainly due to a significant decrease in demand for the most advanced EUV lithography machines, with the order value plummeting from 5.6 billion euros in the previous quarter to 0.656 billion euros. It is expected that sales in the second quarter will be weaker than expected until demand begins to recover.
As a result, ASML's overnight US stocks fell by 7.09%. Other chip stocks were also affected, with Micron Technology falling by 3.5%, Broadcom by 2.6%, Qualcomm by 2%, and Intel by 1.4%. Arm's stock price saw the largest decline, dropping by 9.4%, reducing its year-to-date gain to 47%. SoftBank, which holds most of Arm's shares, saw its stock price fall by 4.1% on Wednesday.
Other chip manufacturing equipment suppliers also experienced declines on Wednesday, with Applied Materials, KLA Corporation, and Lam Research all falling by more than 4%.
Following the sharp decline in chip stocks in Europe and the United States, Asian chip stocks are expected to be under pressure at the opening. Tony Sycamore, a market analyst at IG Australia, stated, "ASML's performance announcement may serve as a warning for the tech giants that will report earnings in the coming week. Chip stocks may experience volatility, and any stocks related to chips will face a challenging day."
At the same time, some analysts believe that the decline in ASML orders serves as a reminder that despite the surge in demand for chips used in artificial intelligence technology, many other industries still face challenges of slowing demand.
Daniel O'Regan of Mizuho Securities wrote, "As Samsung and TSMC clear out hardware inventories for smartphones, computers, and cars, they are delaying new orders."