ASML earnings drag semiconductor stocks lower

Chip
stocks
fell
on
Wednesday
after
ASML,
a
key
developer
of
semiconductor
manufacturing
equipment,
said
that

bookings
fell
by
61%
sequentially
during
the
first
quarter,
a
steeper
drop
than
investors
had
expected.

AMD’s
stock
fell
over
nearly
6%,


Nvidia
shares
fell
over
3%,


Intel
shares
fell
under
2%
and


Qualcomm
was
off
over
2%.
But
the
biggest
drop
affected
chip
technology
firm


Arm,
which
was
trading
nearly
12%
lower
on
Wednesday.

ASML
fell
over
7%
on
a
day
when
the
entire
S&P
500
index
was
only
down
less
than
1%.

ASML
is
essentially
the
only
supplier
of
machines
that
are
needed
to
build
the
most
advanced
chips
in
the
world,
which
often
cost
hundreds
of
millions
of
dollars
each.
The
Dutch
company
shipped
449 “lithography”
machines
in
2023,
and
its
main
customers
include
the
world’s
top
processor
foundries:
TSMC,
Samsung
and
Intel.

Its
top
two
customers
accounted
for
over
half
of
its
2023
sales.
Sales
were
down
in
Taiwan
and
South
Korea,
where
TSMC
and
Samsung
are
based,
respectively.

Foundries
physically
manufacture
the
chips
that
companies
like
Nvidia
or
Apple
design,
so
any
sign
that
they
are
buying
less
equipment
could
suggest
a
downturn
in
the
deeply
cyclical
semiconductor
industry,
which
could
then
impact
the
sales
of
chip
companies
to
end
customers.
And
since
licensing
companies
such
as
Arm
book
a
few
cents
of
revenue
whenever
a
chip
is
made
using
their
technology,
fewer
sales
of
manufacturing
machines
could
signal
fewer
chips
coming
to
market
overall.

Total
bookings
for
ASML’s
machines
fell
4%
year-over-year,
and
CEO
Peter
Wennink
said
in
a
statement
that
he
expects
the
second
half
of
2024
to
be
stronger
than
the
first
half
as
the
semiconductor
industry
manages
a “recovery
from
the
downturn,”
adding
that
the
company
was
in
a “transition
year.”

“You
know
it’s
pretty
clear
that
there’s
a
few
usual
suspects
absent
in
the
the
order
intake,”
Wennink
said
on
a
call
with
analysts.

Wennink
will
retire
at
the
end
of
the
month,
he
said
on
the
earnings
call.
He
will
be
replaced
by
Christophe
Fouquet,
current
chief
business
officer.

Wennink
said
that
he
expected
companies
building
foundries
in
the
U.S.,
such
as
Intel
and
TSMC,
to
put
in
more
orders
for
lithography
machines
later
this
year.
ASML
also
said
that
it
expected
that
government
subsidies
for
chip
factories,
such
as
the

CHIPS
Act
in
the
U.S.,
would
boost
its
sales.
The
company
didn’t
say
how

export
controls
on
China
were
affecting
its
business.

“If
you
look
at
the
announced
plans
of
some
of
our
larger
customers,
it’s
pretty
clear
that
in
the
next
couple
of
quarters,
significant
orders
need
to
come
in,”
Wennink
said.