ASML and Nvidia tumble amid US trade tensions
ASML and Nvidia both took a hit in the markets, falling sharply due to rising concerns about US-China trade tensions and their potential impact on the semiconductor industry.
ASML, a critical player in chip manufacturing equipment, dropped 6.5 per cent, while Nvidia saw a 6.3 per cent after hours on Tuesday.
The Dutch chip equipment giant’s slump came after it revealed weaker than expected bookings, citing a possible slowdown in demand for its machinery.
While the company affirmed its full year revenue and margin forecast, it missed analyst expectations for the first quarter, reporting net bookings of €3.94bn.
In a statement, the firm attributed the weaker numbers to uncertainty surrounding the semiconductor market and concerns over China’s trade policies.
“US tariffs on China continue to be a significant concern for the industry”, said Deutsche Bank analysts.
“The prospect of additional trade restrictions and the uncertainty surrounding export controls are weighing heavily on investor sentiment in the semiconductor space.”
ASML, which counts Taiwan Semiconductor Manufacturing Co, and Intel among its major customers, is the sole producer of lithography machines needed to create cutting edge chips for everything from smartphones, to AI accelerators.
Despite its challenges, the company still forecasts substantial long term growth, projecting total net sales to reach between €30-35bn by 2025.
For Nvidia, the drop came after the firm announced that the US government would impose new restrictions on its chips, which are crucial for AI use.
These chips, designed to comply with previous US export controls, will now require a licence to be exported to China.
Nvidia warned of a $5.5bn charge related to these restrictions, saying it would significantly impact the business.
“These new restrictions underscore the challenges facing the semiconductor sector”, added the Deutsche Bank analyst.
Nvidia’s warning was compounded by a broader upset in the sector, where stocks across the landscape – from suppliers like SK Hynix to TSMC – took a hit, reflecting growing investor fears.