Computer chip equipment maker ASML (ASML.AS) forecast on Tuesday lower than expected 2025 sales and bookings on sustained weakness in parts of the semiconductor market, pushing its shares to their biggest one-day drop since 1998.
The company said that despite a boom in AI-related chips, other parts of the semiconductor market are weaker for longer than expected, leading companies that make logic chips to delay orders and customers that make memory chips to only plan "limited" new capacity additions.
ASML, Europe's biggest tech firm, is the leading supplier of equipment used to manufacture chips, with customers including AI chipmaker TSMC (2330.TW) of Taiwan, as well as logic chip makers Intel (INTC.O) and Samsung (005930.KS), and memory chip specialists Micron and SK Hynix.
The company published its quarterly earnings on its website a day earlier than expected in what a spokesperson described as a "technical error."
"We expect our 2025 total net sales to grow to a range between 30-35 billion euros, which is the lower half of the range" previously forecast, Chief Executive Christophe Fouquet said in a statement.
Chip market weakness "is expected to continue in 2025, which is leading to customer cautiousness", he said.
Trading in the shares was halted several times in Amsterdam before they closed down 16% at 668.10 euros.
The company's earnings showed net profit of 2.1 billion euros on sales of 7.5 billion euros ($8.2 billion), slightly ahead of analyst estimates.
However, the company's bookings were 2.6 billion euros, well below forecasts that had ranged between 4 billion euros and 6 billion euros.
REDUCED EXPECTATIONS
ASML's share price slumped over the summer months following news Intel would cut its capital spending, and weakness in memory chip prices.
Still, ASML's change in outlook was a negative surprise for analysts.
"As recently as early September, management had reiterated that the low-end of the 2025 range was still 'conservative'," Citi said in a note.
"We look for additional detail as to the more recent changes in demand that are affecting ASML’s reduced expectation for 2025 and what it means for customer plans for 2026."
Analyst Michael Roeg of bank Degroof Petercam said he expected ASML's warning to drag down the wider sector, but noted the company's sales were still expected to rise in 2025 from 2024.
"There is still no downturn in (demand for equipment) despite sluggish end markets for chips," he said.
Separately, ASML's sales to China set a record at 2.79 billion euros, or 47% of its total, in the quarter.
ASML dominates the market for lithography equipment, which uses lasers to help create the circuitry of chips.
While ASML cannot sell its most advanced product range in China due to U.S.-led restrictions, Chinese chipmakers have been investing heavily in its equipment to make older generations of computer chips.
($1 = 0.9172 euros)
