November 25, 2024

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Samsung Electronics flag hangs in front of the company's office in Seoul. (Newsis)

Shares of Korean chipmakers fell on Wednesday in a bearish market as major chip-related stocks worldwide declined following a gloomy 2025 forecast from semiconductor bellwether ASML.

ASML, a Dutch company that makes the world’s most advanced chip-making equipment, reported its booking was half the orders the market expected in its quarterly earnings, and saw its shares plunge 16 percent to close at 668.10 euros ($727) in Amsterdam.

Other chip stocks also declined, with Nvidia falling 4.5 percent and AMD dropping 5.19 percent. The benchmark Philadelphia Semiconductor Index slid 5.3 percent.

As of 2:30 p.m. on Wednesday, Samsung Electronics shares stood at 59,700 won ($43.82), down 2.1 percent, while SK hynix shares fell 1.97 percent to stand at 189,100 won.

In its financial report mistakenly released a day earlier "due to a technical error," ASML said it expects net sales for 2025 to log a range of 30-35 billion euros ($32.7-38.1 billion), which is half the range previously forecast.

“While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected,” ASML Chief Executive Officer Christophe Fouquet said in the statement. "This is expected to continue in 2025, which is leading to customer cautiousness."

ASML is considered a semiconductor bellwether as a critical supplier of the cutting-edge extreme ultraviolet lithography machines used to make the most advanced chips. As customers, the company has global chip giants such as Samsung Electronics, SK hynix, TSMC and Intel.

For the third quarter, the Dutch firm reported a net profit of 2.1 billion euros on sales of 7.5 billion euros. Bookings were 2.6 billion euros, well below forecasts of between 4 billion and 6 billion euros.

ASML's analysis of the AI chip boom and the weaker performance in other parts of the chip market resonate with South Korean chipmakers. The country's top two chipmakers are expected to post contrasting third-quarter results, as their performance differed in capitalizing on the AI chip boom.

According to the market consensus Wednesday, SK hynix is expected to report sales of 18.03 trillion won and an operating profit of 6.76 trillion won in the July-September period. Some analysts anticipated SK hynix to achieve an operating profit of over 7 trillion won, and easily beat Samsung Electronics' chip business.

SK hynix has been deemed a winner over Samsung, successfully supplying its latest High Bandwidth Memory chips to Nvidia while its crosstown rival failed to do so. HBMs have risen as crucial components to support graphics processing units in artificial intelligence operations.

In its earnings guidance earlier this month, Samsung Electronics predicted its overall operating profit for the third quarter would come in at 9.1 trillion won, missing market expectations of 10.77 trillion won.

The company said it expected sales to reach 79 trillion won, an all-time quarterly high, but still below the market consensus of 80.9 trillion won.

Samsung's guidance covered overall sales and earnings but did not distinguish the figures by business divisions. Market analysts predict Samsung's semiconductor division's operating profit is likely to be below 5 trillion won.

"Samsung Electronics' Device Solution division appears to have struggled more than expected, with increased spending and a reduced shipment and pricing edge amid a slowdown in the overall IT market," IBK Securities said, lowering its prediction for Samsung chip division's quarterly operating profit from 5.4 trillion won to 4.1 trillion won.

By Jo He-rim (herim@heraldcorp.com)