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ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML) maintained its Outperform rating, but the company's outlook for calendar year 2025 (CY25) took a hit. The semiconductor equipment maker lowered its CY25 revenue projection from the initial range of €35-40 billion to €30-35 billion. This comes after the firm reported a significant drop in quarterly bookings, falling to €2.6 billion from the previous quarter's €5.6 billion.
The decrease in bookings and the revised guidance reflect a slower-than-anticipated recovery and a more gradual ramp-up in new technology nodes at certain logic customers. This is partly attributed to reduced capital expenditure from Intel, announced in July, and delays in Samsung (KS:005930)'s new Texas fabrication plant, now pushed back to 2026.
ASML's recent earnings report, which was released earlier than scheduled, also touched on the normalization of revenue from China, estimated to be around 20% of the total revenue next year. The company's qualitative comments matched expectations, but the magnitude of the downturn was more severe than anticipated, leading to disappointment in both bookings and the CY25 guidance.
The market is now looking ahead to ASML's earnings call for additional details on the extent of the slowdown in logic and the potential for a rebound in calendar year 2026 (CY26). Analysts are keen to understand whether some of the spending expected for CY25 might be deferred to CY26.
In the semiconductor capital equipment sector, ASML's experience with the downturn contrasts with Tokyo Electron's admission that the scale of the cuts by Intel exceeded their expectations. The industry is closely monitoring these developments to gauge the broader impact on semiconductor manufacturing and equipment demand.
Taiwan Semiconductor Manufacturing Co (TSMC) has reported a 40% increase in its third-quarter net profit due to a surge in demand for advanced chips integral to artificial intelligence applications. The company's net profit forecast for the quarter ending September 30 is T$298.2 billion ($9.27 billion), surpassing the T$211 billion recorded in the third quarter of 2023. TSMC is also investing heavily in new facilities, including a $65 billion commitment to three plants in Arizona, USA.
Intel has declined a bid from British chip firm, Arm Holdings (NASDAQ:ARM), to acquire its product division. Despite facing challenges, Intel is reinventing its business strategy, focusing on AI processors and establishing a chip contract manufacturing business. The company has also launched new Xeon 6 processors and Gaudi 3 AI accelerators to address the growing demand for high-performance, cost-effective AI infrastructure.
Meanwhile, Qualcomm (NASDAQ:QCOM) Inc. is reportedly considering a takeover of Intel Corp (NASDAQ:INTC)., a move that could reshape the semiconductor industry by combining Qualcomm's strength in mobile processors with Intel's dominance in the PC and server market. The potential acquisition could create a semiconductor titan with a broad portfolio spanning mobile devices, personal computers, servers, and automotive technology.
InvestingPro Insights
As the semiconductor industry faces challenges, Intel's recent performance and outlook provide additional context to ASML's revised projections. According to InvestingPro data, Intel's revenue growth has slowed to 1.99% over the last twelve months, with a slight decline of 0.9% in the most recent quarter. This aligns with ASML's observations of reduced capital expenditure from key customers like Intel.
InvestingPro Tips highlight that Intel is trading at a high P/E ratio of 99.78, suggesting investors are still pricing in future growth despite current headwinds. However, the company's stock price has fallen significantly over the last three and six months, reflecting market concerns about the semiconductor industry's near-term prospects.
It's worth noting that Intel remains a prominent player in the Semiconductors & Semiconductor Equipment industry, and analysts predict the company will be profitable this year. These factors, along with Intel's 33-year streak of maintaining dividend payments, indicate the company's resilience in the face of industry challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Intel, providing a deeper understanding of the company's position within the evolving semiconductor landscape.
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