Chip equipment makers are warning of a slump in demand for global electronics after orders declined in the first quarter, reflecting growing economic uncertainty around the world.
(Bloomberg) — Chip equipment makers are warning of a slump in demand for global electronics after orders declined in the first quarter, reflecting growing economic uncertainty around the world.
Semiconductors are facing a slowdown in orders from some customers in the chip market, as rising interest rates and surging inflation dents consumer sentiment. Earnings reports from producers of gear used to manufacture chips, which are essential for everything from smartphones to medical equipment, suggest the trend may continue.
Demand in the memory market weakened in the first quarter and is expected to remain depressed in 2023, ASM International NV Chief Executive Officer Benjamin Loh said in the company’s earnings report Tuesday after market.
The Dutch chip-tool maker cut its revenue forecast for the second half, and said sales may decline 10% or more in the period compared to January to June. Spending on wafer fab equipment is projected to drop by a high teens percentage in 2023, according to ASM International.
Demand from BE Semiconductor Industries NV’s Chinese customers remained weak last quarter, representing around 27% of the firm’s total revenue, the company said Wednesday. Orders decreased 21% in the period compared to the previous quarter as demand for mainstream computing and hybrid bonding applications fell.
ASML Holding NV, Europe’s most valuable technology company, opened the earnings season last week with a warning of “mixed signals” on demand from different end-market segments. While ASML has a backlog of €38.9 billion ($42.9 billion), first-quarter bookings dropped 46% to €3.75 billion from a year earlier, raising concerns about its long-term outlook.
Earlier this month, ASML’s biggest customer, Taiwan Semiconductor Manufacturing Co., missed revenue estimates for the second consecutive quarter. Texas Instruments Inc. on Tuesday gave a disappointing sales forecast for the current quarter.
ASM International shares plunged as much as 13% Wednesday, the biggest drop since March 2020. Other chip-equipment makers also saw their shares decline, with BE Semiconductor sliding as much as 3% before reversing its losses.
A lower capital expenditure budget at memory chip-makers supports ASM International’s expectation that demand will remain weak for the rest of the year, according to Bernstein analyst Sara Russo. A 6% decline in orders last quarter from a year earlier reflects softening demand, she said in a note.
–With assistance from Henry Ren.
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