TXN - ASML sinks after Q1 results as chips slip ahead of earnings season

2023-04-19 12:51:04 ET

ASML ( NASDAQ: ASML ) fell on Wednesday, pulling the industry as a whole lower, as investors awaited earnings season to kick into high gear.

ASML ( ASML ) dipped nearly 3% after the company said first-quarter results topped expectations. The company earned €4.96 per share on €6.7B in revenue, topping estimates of €4.16 and €6.34B.

The company said its gross margin during the period was 50.6%.

Though the results beat expectations, ASML ( ASML ) said its sales in China - its third largest market - fell during the period. However, the company expects China sales to rebound through the remainder of the year even as geopolitical tensions between China and the U.S. over China's semiconductor industry wages on.

Looking ahead, ASML ( ASML ) said it expects second-quarter sales to be between €6.5 billion and €7.0 billion and a gross margin between 50% and 51%. For the full-year, it expects grow revenue 25% year-over-year.

Other chip equipment makers were modestly lower in mid-day trading, including Lam Research ( LRCX ), which is scheduled to report results tonight, Applied Materials ( AMAT ) and KLA Corp. ( KLAC ).

NXP Semiconductors ( NXPI ) shares fell 1.5% even as the company's CEO praised the finalization of the European Union's Chips Act to compete with the U.S. and China, but asked for more clarity on certain issues, including China.

"What I think for our industry is sometimes hard to deal with is there doesn't seem to be a clear roadmap on what to expect going forward," CEO Kurt Sievers said at the Bloomberg New Economy conference, according to Reuters.

He added that roughly 38% of NXP's ( NXPI ) sales are in China, but those sales will move to other countries, so "we will just follow where our customers are moving."

GlobalFoundries ( NASDAQ: GFS ) shares fell 1.7% even as the company sued IBM ( NYSE: IBM ) over "unlawfully" disclosing trade secrets to Japan's Rapidus and Intel ( NASDAQ: INTC ).

In a statement, GlobalFoundries ( GFS ) alleged IBM ( IBM ) is "unjustly receiving potentially hundreds of millions of dollars in licensing income and other benefits." The company is

asking for compensatory and punitive damages and an injunction to stop IBM ( IBM ) from "further unlawful disclosure and use of GF’s trade secrets."

IBM ( IBM ) shares fell 1.2% , while Intel ( INTC ) dropped 1.6% .

AMD ( AMD ) and Nvidia ( NVDA ), which compete with Intel ( INTC ), both saw fractional moves to the upside .

Other semiconductor stocks were modestly lower in mid-day trading on Wednesday, including Qualcomm ( QCOM ), Broadcom ( AVGO ), Analog Devices ( ADI ) and Texas Instruments ( TXN ).

Bank of America recently said that ASML ( ASML ) was among 15 companies that it believed would benefit from the rise of artificial intelligence .

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