Bad news from ASML impacted the chip sector significantly.
Intel shares experienced a decline as the chip stock faced a broader sector downturn driven by a negative forecast from ASML, a key industry player, regarding its outlook for 2025. At 3:16 p.m. ET, Intel’s stock had fallen by 3.3% in response to this development.
ASML is a critical company in the semiconductor industry, especially for foundry operators like Intel, since it provides advanced lithography machines necessary for semiconductor production. In its third-quarter earnings report, ASML indicated that the anticipated recovery in demand for its machines was slower than expected, pointing to weaknesses in logic and memory chips. While Intel remains a competitor in logic chips, it sold its memory business a few years ago.
Intel’s foundry operations face uncertainty following the company’s restructuring announcement in August, which included plans to lay off at least 15% of its workforce. Last month, Intel achieved a victory by announcing a deal to produce a custom artificial intelligence (AI) fabric chip for Amazon. Nevertheless, the news from ASML suggests that growth in the foundry industry may be slower than anticipated, potentially affecting Intel’s ambitions in its new foundry services business.
In addition, Intel revealed a partnership with AMD to form an advisory group focused on the x86 central processing unit (CPU) architecture shared by both companies. This initiative seems intended to counteract Arm Holdings, which has a strong presence in the smartphone CPU market due to its power-efficient architecture and is gaining market share from Intel and AMD.
For Intel, sector-wide or macroeconomic challenges pose significant issues as the company is already struggling to be profitable and is incurring substantial losses in its foundry division. Although there is potential for recovery, Intel faces a precarious situation where any setbacks, internal or external, could be detrimental.
