It is an industry crucial to the 21st century but two of its biggest players are going in opposite directions.
Last week shares in the company critical to the making of the most advanced semiconductors plunged after a disappointing earnings report. Two days later, shares in the world’s biggest chipmaker soared, highlighting the great divide that has opened up in a strategic industry that is critical to 21st century technologies.
It also lowered its guidance for 2025, saying it expected net sales to be between €30 billion and €35 billion, compared with its previous forecast of up to €40 billion. ASML sells its large and ultra-expensive machines that print circuit patterns onto silicon wafers to companies like TSMC, Samsung and Intel.
Those companies that have fallen behind the bleeding edge of AI chip development are more exposed to the economic cycle.During the pandemic there was a massive increase in demand for chips as consumers scrambled to update their home offices to adapt to working from home and spent the fiscal largesse that governments of most of the major developed economies showered on consumers and businesses.
There’s also a geopolitical dimension, one that might well soon impact even the successful AI players. In other words, there is a very heavy geopolitical overlay on the industry, which is caught up in the efforts by the US to limit or slow the development of China’s technological capabilities, critical to China’s own ambition of dominating key advanced technologies and industry sectors.
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