By Asa Fitch
Dutch chip-making equipment giant ASML pointed to growing caution Tuesday among its customers as the overall chip market takes longer than expected to recover, even while AI chips remain in high demand.
ASML shares fell more than 16% following the warning. Chip stocks including Nvidia, Intel, Advanced Micro Devices and Broadcom also declined.
Artificial intelligence has buoyed parts of the chip industry over the past two years, vaulting Nvidia to one of the largest listed companies in the world.
Other chip-makers less connected to the AI boom, such as Intel, have had a tougher go. Parts of the industry that boomed during the pandemic when chips for cars and consumer electronics were in short supply have also seen demand slide in recent quarters.
ASML supplies machines to chip-makers such as Taiwan Semiconductor Manufacturing Co., which make chips on contract for the likes of Nvidia and AMD. It also supplies Intel, which has its own chip factories.
The company's status as a critical supplier to many chip-makers makes its results an indicator of the industry's investment plans and outlook.
"While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover," Chief Executive Christophe Fouquet said in a statement.
ASML reported quarterly earnings and an outlook that exceeded Wall Street forecasts on Tuesday, but it said sales in 2025 were estimated at the lower end of previous forecasts. Its gross profit margin would be below the range it earlier provided as manufacturers took longer to ramp up production of their most advanced chips, the company said.
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(END) Dow Jones Newswires
October 15, 2024 12:11 ET (16:11 GMT)
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