The chip sector is experiencing a wave of downward pressure today, with AMD stock leading the decline. The catalyst for this downturn is ASML, a key player in the semiconductor industry, whose soft guidance has sent shockwaves through the market.
ASML, a Dutch company known for its advanced lithography equipment used in chip manufacturing, anticipates a slowdown in its financial performance. They predict net sales between $9.5 billion and $10.03 billion for the fourth quarter of fiscal year 2024, alongside a gross margin between 49% and 50%. Furthermore, the company expects increased spending on research and development, reaching €1.1 billion ($1.2 billion), and administrative and selling costs, reaching €300 million ($327 million).
While ASML projects full-year net sales of approximately $30.5 billion for fiscal year 2024, their outlook for fiscal year 2025 reveals a more cautious approach, with net sales anticipated between $32.70 billion and $38.15 billion. These predictions suggest a potential slowdown in the chip industry’s growth, impacting companies like AMD that rely on ASML’s equipment for their operations.
Adding to the uncertainty in the chip sector, reports suggest that the U.S. is considering limiting chip exports to certain countries, including potential restrictions on Persian Gulf nations. This move, aimed at protecting national security, could further impact the global semiconductor supply chain and potentially affect the revenue streams of chip companies.
The U.S. already imposes limits on the export of AI chips from American chipmakers to countries such as China, and the proposed export controls represent an expansion of these restrictions. This news, coupled with ASML’s soft guidance, underscores the challenges facing the chip industry and could potentially impact the stock prices of companies like AMD in the coming months.
As of writing, AMD shares are trading 5.11% lower at $156.84, reflecting the market’s reaction to ASML’s announcement and the broader concerns surrounding the chip sector.