Chip stocks fall as ASML's weak outlook raises concerns of non-AI chip demand
Updates shares and adds context on chip overcapacity in paragraphs 8-9
Oct 15 (Reuters) -Semiconductor stocks in the United States and Asia fell after chip equipment maker ASML ASML.AS cut its annual sales forecast over weak non-AI chip demand.
AI chip giant Nvidia NVDA.O, which had briefly surpassed Apple as the world's most valuable company the previous day, dropped 4.5%, wiping out about $158 billion from its market cap, widening the gap with Apple's value of $3.56 trillion.
Other chip firms, including AMD AMD.O, Intel INTC.O, Arm ARM.O, Broadcom AVGO.O and Micron MU.O, fell between 3.2% and 5% at Tuesday's close, which dragged the Philadelphia SE Semiconductor Index down nearly 5% and weighed on the Nasdaq index .IXIC.
U.S.-listed shares of ASML ASML.O closed 16% down after the Dutch company published results ahead of schedule in an apparent error, reporting weak bookings, lowering forecast, and indicating slower chip demand recovery outside the AI sector.
Despite the surge in demand for AI-related chips, the company reported that other segments of the semiconductor market remain weaker than expected, with logic chip makers delaying orders and memory chip makers only planning "limited" new capacity additions.
"ASML's fat finger error isn't cause for concern in itself, but the content of the release didn't make comforting reading for investors," said Derren Nathan, head of equity research, Hargreaves Lansdown.
Stocks of Asian chipmakers, which are among ASML customers, also lost ground on Wednesday, with Taiwan Semiconductor Manufacturing Co 2330.TW, down 2.3%, Samsung Electronics 005930.KS falling 2.5% and SK Hynix 000660.KS declining 2.2%.
Spurred by blockbuster demand for chips during the pandemic, chipmakers had raced to build extra capacity. That growth stabilized as supply chains eased, leaving them to wait to order new tools until their factories looked ready to overflow with orders.
ASML's forecast was a lagging indicator of what has been playing out at these chip factories for months, analysts said.
Samsung earlier this month warned its third-quarter profit would come in below market expectations, as it is struggling to capitalize on demand for artificial intelligence chips. In contrast, Samsung's rival, TSMC, which counts AI leader Nvidia as one of its major customers, is expected to report a 40% leap in third-quarter profit on Thursday.
Separately, Bloomberg News reported on Monday that U.S. officials have been considering implementing a cap on export licenses for AI chips to specific countries - mostly in the Persian Gulf region, citing national security concerns.
Washington is increasingly concerned that the Middle East might serve as a channel for China to acquire advanced American chips that are prohibited from being directly shipped to the Asian country.
"With the AI revolution expected to play such a huge part in upping productivity and enabling other technological advances, it's not surprising the U.S. wants to do what it can to maintain its dominance," said Danni Hewson, head of financial analysis at AJ Bell.
ASML's lowered outlook suggests factory overcapacity, not chip doom https://tmsnrt.rs/3BVaZGt
Reporting by Akash Sriram and Jaspreet Singh in Bengaluru; Additional reporting by Hyunjoo Jin in Seoul; Editing by Tasim Zahid and Christopher Cushing
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