ASML, the Dutch semiconductor equipment company recently made headlines when they posted record first quarter net bookings. They finally announced 3.94 billion euros in total! This was a major miss against analyst estimates. They had forecast net bookings of about 4.89 billion euros, as per Reuters.
The disappointing bookings at the same time, is a backdrop to a comprehensive national security investigation being conducted by the U.S. Commerce Department. This latest probe is aimed at imports of semiconductor manufacturing technology and downstream products manufactured using this technology. Industry experts are concerned that new trade measures would take America in the opposite direction—further undermining the semiconductor supply chain.
Last week, the U.S. administration announced a temporary exemption on reciprocal duties for several major sectors. This exemption covers smartphones, computers and semiconductors, giving a temporary reprieve to companies doing business within these markets. The exemption aims to alleviate some of the pressure stemming from U.S. President Donald Trump’s tariff plans, which have been a source of concern for global chip stocks that have exhibited fragility over the past two weeks.
The context of ASML’s lower than expected bookings are complicated by these broader challenges in the industry. The continued probe into semiconductor imports has made things uncertain, having industry leaders watch with bated breath, as the saying goes.
“The probe will examine whether additional trade measures, including tariffs, are necessary to protect national security.” – U.S. Commerce Department
Global chip inventories are bare at the moment. Investors are understandably concerned about the drastic impact potential tariffs would have on the semiconductor supply chain. Industry experts warn that if any of these trade measures go through, it will serve only to interrupt production and innovation in this vital field.