Analysts at investment bank UBS said ASML, a supplier of key chip equipment, will face weak demand from buyers for its products in the coming years, and that the artificial intelligence boom will not be enough to offset these downside risks. In a new research note, UBS downgraded ASML to “neutral” and lowered its target price on the stock to 900 euros ($997.16) from the previous 1,050 euros, saying it expects “lithography intensity to “Tends to be stable”, that is, the photolithography intensity will reach a stable level. In logic and storage wafers, the associated costs of lithography tools and other wafer fabrication equipment tools. Analysts at UBS pointed out that part of the reason for this stagnation is the trend of “EUV tool reuse” among memory chip manufacturers, which are using existing stocks of ASML EUV machines to produce new chips rather than purchasing new equipment. Makers of such memory chips include Samsung and Nvidia supplier SK Hynix. “While ASML is one of the best fundamentally sound companies in the European technology sector with strong management execution, we downgrade the stock to Neutral as we expect EPS (earnings per share) to grow at a CAGR of 13% in 2025 (CAGR) growth -30E vs 24% in 2018-25E, which we believe demonstrates ‘normalization’ relative to peers and historical multiples,” analysts at the bank said in a note published on Wednesday. ASML is behind a key technology in wafer manufacturing called EUV (extreme ultraviolet radiation). The company’s EUV lithography machines produce large amounts of short-wavelength light to print small, complex designs on microchips. UBS expects lithography tools’ share of total wafer fabrication equipment spending to decline from a peak of 30% in 2025 to 25% in 2027, and then after 2028 as a new generation of so-called “high numerical aperture” EUV tools appeared and increased again. “DRAM”. Or dynamic random access memory. GAA architecture refers to a transistor design that places gates on all four sides of the current path. This is done to improve the performance and efficiency of the chip. DRAM is required for the operation of computers. At the same time, UBS said that artificial intelligence end-use revenue – which it said will account for only 10% to 15% of group revenue in the next three to five years – “may not be enough to offset” these demand normalization factors. The company added that spending on lithography tools in China has normalized overall due to the risk of further export controls from the United States and the Netherlands. An ASML spokesperson declined to comment on the downgrade when contacted by CNBC. Nvidia shares fell more than 6% on Wednesday after the company’s shares fell sharply on Tuesday, and other chip stocks also fell. NVIDIA’s stock price fell, and its market value evaporated by approximately US$279 billion, which was the largest single-day drop in the history of U.S. stocks.
UBS downgrades key chip company ASML, predicts demand to “normalize” | Real Time Headlines
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