"ASML Shock, Not Worsening AI Boom"... Semiconductor Stocks Stabilize

Philadelphia Semiconductor Index Up 0.21%
"AI Chip Demand to Continue"

Semiconductor stocks, which had plunged due to a shock in results from Dutch semiconductor equipment maker ASML, showed signs of recovery on the 16th (local time). The market analyzed that the semiconductor stock shock from the previous day was merely due to a temporary deterioration in ASML's performance and not a signal that overall demand for artificial intelligence (AI) chips is slowing down.

On this day, the Philadelphia Semiconductor Index, composed of semiconductor-related stocks, rose 0.21% from the previous day to close at 5155.86 in the New York stock market. Although it had plunged 5.28% the day before, it showed a stable appearance. Nvidia closed up 3.13%, TSMC up 0.19%, Micron up 4.72%, and Broadcom up 0.48% compared to the previous day. However, AMD fell 0.33%, and ASML dropped 6.42%. Intel declined 1.54% amid concerns that Chinese authorities might conduct security audits.

[Image source=Reuters Yonhap News]

The previous day, semiconductor stocks broadly fell sharply after ASML announced earnings forecasts that significantly missed market expectations and news emerged that the U.S. government is considering setting country-specific caps on AI chip exports by domestic companies. ASML announced that it expects sales in 2025 to be between 30 billion and 35 billion euros (approximately 44 trillion to 52 trillion won), which is far below both the company’s previous forecasts and Wall Street expectations. ASML, which manufactures advanced semiconductor equipment, serves as a barometer for the semiconductor industry.

Wall Street analysts interpreted ASML’s disappointing forecast as not signaling a decline in global semiconductor demand. They explained that companies have been stockpiling ASML equipment, production capacity is sufficient, and semiconductor inventories have piled up due to increased production. In particular, demand for AI chips is still considered robust.

Stacy Rasgon, an analyst at Bernstein, said, “Selling Nvidia, AMD, and Broadcom was potentially excessive,” adding, “If there is one bright spot in ASML’s results, it is AI demand.”

Thibaut Reneau, an analyst at KBC Securities, explained that although big tech companies have invested heavily in AI infrastructure, causing the value of AI chip manufacturers to soar, AI still accounts for a small portion of ASML’s sales. He said ASML’s weak performance came from traditional semiconductor sectors such as smartphones, computers, utilities, and automobiles, not AI semiconductors. He noted that Nvidia and AMD account for about 7% of ASML’s sales and said, “AI can deliver strong performance and is expected to continue. On the other hand, the remaining 93% of semiconductor demand is weak, which is an important distinction.” In fact, ASML stated the previous day that despite the AI chip boom, other semiconductor sectors have been weaker for longer than expected.

According to International Business Strategies (IBS), a semiconductor industry consulting firm, the AI chip market is expected to grow 99% this year and 74% next year. The overall semiconductor market is expected to grow 18% this year and 12% next year. Handel Jones, CEO of IBS, said, “There is no change in the overall industry forecast that demand for AI chips and AI-dedicated memory chips will surge,” adding, “This is a short-term and temporary change. It will be fine in the long term.”