Investing.com -- Shares of semiconductor equipment manufacturers, including ASML (AS:ASML), Lam Research (NASDAQ:LRCX), Applied Materials (NASDAQ:AMAT), and KLA Corp, experienced significant gains on Thursday. The uptick in these stocks came after Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, announced a capital expenditure (capex) target for the year that surpassed analysts’ expectations.
TSMC’s ADRs surged over 4% in US premarket trading as the company outlined a capex guidance of $38 billion to $42 billion for 2025, well above the average analyst projection of about $35.1 billion. This announcement has had a ripple effect on US and European chip equipment companies, signaling a potentially lucrative year for the semiconductor industry.
ASML, a key player in the semiconductor equipment market, saw its shares increase by 4%. The company, which is known for its advanced lithography systems critical to chip manufacturing, is expected to benefit from TSMC’s increased focus on advanced packaging. Advanced packaging accounted for more than 8% of TSMC’s total revenue in 2024 and is projected to rise to 10% this year.
Furthermore, TSMC anticipates allocating between 10% to 20% of its 2025 capex to advanced packaging, testing, mask-making, and other areas, compared to "about 10%" for 2024 capex. This strategic investment underscores the growing importance of advanced packaging technologies in the semiconductor sector.
The company also forecasts a mid-40% compound annual growth rate for AI accelerator sales over the next five years, starting from 2024, indicating strong growth prospects in this area.
The positive outlook from TSMC comes as a crucial development for ASML, which analysts have noted is experiencing slower orders in other areas due to a downturn in the chip industry and challenges faced by key clients such as Intel (NASDAQ:INTC) and Samsung (KS:005930).
In the US, KLA Corp’s stock rose by 3%, Lam Research saw a 3.2% increase, and Applied Materials’ shares went up by 3.1%. Meanwhile, in Europe, ASML’s stock climbed and BE Semiconductor, which specializes in advanced chip-packaging tools, jumped by 5%.
This surge in stock prices reflects investor optimism regarding the semiconductor equipment sector’s potential growth, driven by TSMC’s aggressive investment plans that could lead to increased demand for the products and services offered by these companies.
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