Dutch lithography company ASML announced a significant reduction in its 2025 sales forecast, prompting a sharp decline in semiconductor stocks on Tuesday amid concerns over weakening global chip demand.
ASML revised its 2025 total net sales estimate to between €30bn and €35bn, with a gross margin forecast of between 51% and 53%.
The company published its Q3 2024 results a day earlier than scheduled, reporting total net sales of €7.5bn, a gross margin of 50.8%, and net income of €2.07bn, an increase from €1.58bn in Q2 2024.
ASML expects total net sales for Q4 2024 to be between €8.8bn and €9.2bn, with a gross margin of between 49% and 50%. It anticipates 2024 full-year sales of around €28bn.
ASML sees steepest share price decline in 25 years
According to a report in Reuters, the downgrade in ASML’s forecast led to the company experiencing its steepest single-day share price decline in 25 years, with its latest projections falling near the lower end of previous estimates. The revised outlook also affected other semiconductor companies, as ASML’s tools are crucial to the production processes of major players like TSMC, Intel, and Samsung Electronics.
During the pandemic, demand for chips surged, prompting chipmakers to build additional capacity and stock up on ASML’s advanced lithography tools. With supply chains normalising and growth stabilising, analysts noted that chipmakers are delaying new tool orders until they need to expand further. ASML’s updated forecast reflects ongoing overcapacity at chip factories that had already invested heavily in manufacturing tools.
In a statement, ASML acknowledged that while demand for artificial intelligence (AI)-related chips remained strong, other segments of the semiconductor market have underperformed expectations. This has prompted companies producing logic chips to postpone orders and memory chipmakers to limit plans for expanding capacity.
“While there continues to be strong developments and upside potential in AI, other market segments are taking longer to recover,” said ASML president and CEO Christophe Fouquet. “It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness.”
Dan Hutcheson, vice chair at analyst firm TechInsights, stated that companies such as Intel, TSMC, and Samsung were pulling back on ASML orders due to sufficient existing capacity, as per the Reuters report.
Hutcheson indicated that semiconductor factory utilisation was about 81% in 2024, whereas manufacturers typically place equipment orders when utilisation rates reach the mid-90% range. Intel’s decision to slow down its factory expansion suggests that other major manufacturers, such as Samsung and TSMC, would also exercise caution, he said.
The repercussions of ASML’s reduced forecast were felt across the semiconductor industry, particularly in the US and Asia. Reuters reported that shares of major chip firms, including AMD, Intel, Arm, Broadcom, and Micron, fell between 3.2% and 5% by the close of trading on Tuesday.
Nvidia also saw its stock drop by 4.5%, wiping out approximately $158bn from its market capitalisation and widening the gap with Apple’s value of $3.56 trillion. The Philadelphia SE Semiconductor Index fell nearly 5%, contributing to a decline in the Nasdaq index.
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