(Oct 16): ASML Holding NV chief executive officer Christophe Fouquet said he expects a slow chip market recovery to extend “well into 2025”, following disappointing third-quarter earnings that sparked a broad sell-off across the semiconductor industry.

The slow recovery in demand has led to “customer cautiousness and some pushouts in their investments”, Fouquet said in a call with investors on Wednesday. The outlook led ASML to slash its earnings guidance, despite Fouquet saying that the artificial intelligence boom, energy transition and electrification continue to provide strong upside.

Fouquet, who took the helm at ASML in April, is facing one of the most tumultuous periods in the company’s history. The Dutch company, which makes the world’s most advanced chipmaking machines, has shed over €60 billion (US$65 billion or RM280.21 billion) in value since it reported bookings were less than half of what analysts expected on Tuesday.

ASML is a bellwether for the wider chip industry, and its results fuelled concerns that the AI boom has failed to solve a broader slump in chips demand. It has a monopoly on making the machines that help companies like Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co produce the most advanced chips that power everything from Apple Inc’s smartphones to Nvidia Corp’s AI accelerators.

“Today, without AI, the market would be very sad, if you ask me,” Fouquet said. “The recovery is not what I think everyone had wished for.”

Fouquet said demand recovery in the automotive, mobile and PC markets has been particularly slow, even while AI-related server demand is robust. The Dutch company will slow its short-term investment plans to match the market, he added.

Some orders that were scheduled for 2025 have been pushed back to 2026, chief financial officer Roger Dassen said on the call.

ASML cut its outlook for 2025, triggering a 16% decline in its share price on Tuesday in Amsterdam, the biggest since June 12, 1998. On Wednesday, it fell as much as 5.8% and surrendered its place as Europe’s most valuable technology company to software firm SAP SE. It has lost nearly a quarter of its value since Fouquet took over.

The weak results were amplified by the company mistakenly releasing its financial results a day earlier than scheduled. Fouquet apologised for the premature publication of the release, which was expected on Wednesday, saying it was “due to a technical error”.

“This was very unfortunate,” he said.

ASML is facing pressure from multiple directions. While demand for the chips that power AI data centres remains strong, key customers including Intel Corp and Samsung are struggling.

Intel, faced with shrinking sales and mounting losses, last month delayed new factories planned in Germany and Poland. Samsung issued an apology to investors this month for disappointing results after delays let competitors dominate the market for high-bandwidth memory chips used in AI.

Apple shares slipped 1.5% on Wednesday. Analysts have said preliminary data on preorders and lead times for the iPhone 16 suggest tepid demand.

Companies producing automotive and industrial chips, which often use ASML’s less advanced machinery, are also in a prolonged slump because their clients have too much inventory.

Meanwhile, the US and its allies are ratcheting up pressure on China, ASML’s biggest market, as Washington seeks to limit access to cutting-edge chip technology. China accounted for €2.79 billion of sales in the third quarter, nearly half of ASML’s total.

Dassen said the company expects China sales to account for about 20% of total revenue next year, adding that this level is a “normal percentage” for that market.

“We read newspapers, and we read continued speculation on things that might happen,” Dassen said. “And as a result of that, we’ve decided to take a more cautious view” on China, he added.

Last month, the Netherlands published new export control rules that made ASML apply for export licences in The Hague instead of US for some of its older machines. That came after a Bloomberg News report that the Dutch government would limit some of ASML’s ability to repair and maintain its semiconductor equipment in China.

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