Decline in Korean Chipmaker Shares Following ASML's Gloomy Forecast

Shares of South Korean chip manufacturers dropped on Wednesday amid a bearish trend in the global market. This decline came on the heels of a disappointing forecast for 2025 from ASML, a leading semiconductor company known for its advanced chip-making technology.

ASML's Forecast Shakes Market

ASML, based in the Netherlands, reported in its recent quarterly earnings that its bookings were only half of what the market had anticipated, which caused its stock to plummet by 16 percent, closing at 668.10 euros ($727) in Amsterdam. This disappointing news had a ripple effect, resulting in declines across other significant chip stocks. For instance, Nvidia saw a drop of 4.5 percent, while AMD fell by 5.19 percent. Moreover, the benchmark Philadelphia Semiconductor Index experienced a decrease of 5.3 percent.

Korean Companies' Share Performance

As of 2:30 p.m. on Wednesday, Samsung Electronics' shares were priced at 59,700 won ($43.82), marking a 2.1 percent decline. Similarly, SK hynix shares dropped by 1.97 percent, bringing their value to 189,100 won.

ASML's Financial Report and Implications

ASML had mistakenly released its financial report a day earlier due to a technical error. In this report, the company projected net sales for 2025 to be between 30 and 35 billion euros ($32.7-38.1 billion), which is significantly lower than its previous expectations. ASML's Chief Executive Officer, Christophe Fouquet, commented on the situation, stating that while there are promising developments in the AI sector, other areas of the market are recovering at a slower pace than expected. This cautious outlook is influencing customer sentiment as well.

The Role of ASML in the Semiconductor Industry

ASML plays a vital role in the semiconductor industry as a key supplier of the sophisticated extreme ultraviolet (EUV) lithography machines, which are essential for producing the most advanced chips. Notable clients of ASML include major chipmakers such as Samsung Electronics, SK hynix, TSMC, and Intel.

Divergent Performance Among Korean Chipmakers

In its third-quarter report, ASML indicated a net profit of 2.1 billion euros with sales of 7.5 billion euros. However, the company's bookings were only 2.6 billion euros, which fell short of market estimates that ranged from 4 to 6 billion euros.

The analysis from ASML about the AI chip market boom and the lagging performance in other sectors resonates with South Korea's prominent chip manufacturers. Market expectations suggest that while SK hynix is projected to report sales of 18.03 trillion won with an operating profit of 6.76 trillion won for the July-September period, Samsung Electronics' performance may not meet the same standards. Some analysts had expected SK hynix to surpass 7 trillion won in operating profit, outpacing its rival Samsung.

Challenges for Samsung Electronics

In comparisons of performance, SK hynix has gained an edge by successfully supplying its latest High Bandwidth Memory (HBM) chips to Nvidia, whereas Samsung has struggled in this area. HBM is crucial for supporting graphics processing units, particularly in AI applications.

Samsung Electronics had earlier guided an expected operating profit of 9.1 trillion won for the third quarter, which was below the market consensus of 10.77 trillion won. Although it projected record sales of 79 trillion won, this also fell short of the anticipated figure of 80.9 trillion won. Analysts suggest that the semiconductor division of Samsung might generate less than 5 trillion won in operating profit.

IBK Securities has adjusted its forecast for Samsung's chip division, lowering its estimated quarterly operating profit from 5.4 trillion won to 4.1 trillion won, indicating a more challenging performance than previously thought due to rising expenses and decreased shipment and pricing power amidst a slowdown in the overall IT market.

Shares, ASML, Forecast