ASML's gloomy forecast in Q3 orders sinks chip stocks

Semiconductor stocks in the United States and Asia fell after chip equipment maker ASML cut its annual sales forecast over weak non-AI chip demand.

AI chip giant Nvidia, which had briefly surpassed Apple as the world's most valuable company the previous day, dropped 4.5 percent, 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, Intel, Arm, Broadcom and Micron, fell between 3.2 percent and 5 percent at Tuesday's close, which dragged the Philadelphia SE Semiconductor Index down nearly 5 percent and weighed on the Nasdaq index.

U.S.-listed shares of ASML closed 16 percent 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.

Stocks of Asian chipmakers, which are among ASML customers, also lost ground on Wednesday, with Taiwan Semiconductor Manufacturing Co. (TSMC) down 2.3 percent, Samsung Electronics falling 2.5 percent and SK Hynix declining 2.2 percent.

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.

Earlier this month, Samsung warned that its third-quarter profit would come below market expectations as it struggles to capitalize on demand for AI chips. 

In contrast, Samsung's rival, TSMC, which counts AI leader Nvidia as one of its major customers, is expected to report a 40 percent leap in third-quarter profit on Thursday.

(With input from Reuters)