ASML's lowered outlook suggests factory overcapacity, not chip doom
ASML's deep cuts to its 2025 sales forecast sparked a sell-off in chip stocks on Tuesday over worries that global chip demand may be faltering.
The weaker outlook could, instead, reflect some overcapacity at chip factories that had already stocked up on ASML's pricey tools during the pandemic and have become better at using them to produce a larger numbers of chips, analysts said.
ASML's stock plummeted to its biggest single-day loss in a quarter century on its downgraded forecast. In results that the company inadvertently posted a day ahead of schedule, ASML said it expects 2025 total net sales of 30 billion-35 billion euros, near the bottom of its previous forecast.
That dragged down a large swath of the semiconductor industry because ASML has a near-monopoly on critical tools used by TSMC, Intel, and Samsung Electronics to make advanced chips.
Spurred by blockbuster demand for chips during the pandemic, these chipmakers built 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.
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