The main reason for the nearly 5% fall in the Philadelphia Semiconductor Index o

The main reason for the nearly 5% fall in the Philadelphia Semiconductor Index on Oct. 15, 2024, was the lackluster performance of Dutch semiconductor equipment maker ASML and subsequent worsening investor sentiment. Since then, the Philadelphia Semiconductor Index has been on a downward trend for more than a month.

ASML accidentally released its earnings on its website on October 15 ahead of its third-quarter earnings report, which is scheduled for October 16. In the earnings release, ASML cut its 2025 revenue forecast from 30 billion to 35 billion euros. This was interpreted as suggesting that the recovery in the semiconductor industry could be slower than expected, sending investors a shock.

ASML is an exclusive producer of ultraviolet (EUV) exposure equipment essential for semiconductor manufacturing. Therefore, ASML's underperformance was seen as indicative of a possible slowdown in growth for the semiconductor industry as a whole. As a result, investor sentiment was sharply dampened, and shares of major semiconductor companies such as Nvidia, TSMC and Broadcom, as well as the Philadelphia Semiconductor Index, fell.

In summary, ASML's unexpected underperformance announcement raised concerns about a delay in the recovery of the semiconductor industry, which led to weak investor sentiment and a plunge in the Philadelphia Semiconductor Index.

Shares of ASML plunged more than 15% at the time, while the Philadelphia Semiconductor Index fell nearly 5% at one point during the day. This reflects investor anxiety about the prospects of the semiconductor industry.

ASML's underperformance could be interpreted as a significant sign of a possible slowdown in growth in the global semiconductor industry beyond just one company's problems.

ASML is a company that monopolizes the market for extreme ultraviolet (EUV) exposure equipment. As EUV exposure equipment is essential for the production of advanced semiconductors, ASML's performance is closely related to global semiconductor production. Therefore, ASML's poor performance may have the following implications.

Semiconductor Demand Declines: ASML's main clients are global semiconductor companies such as Samsung Electronics, TSMC and Intel. ASML's underperformance means lower semiconductor output from these companies, which could soon lead to lower demand for semiconductors.

Cutting investment in high-tech semiconductors: ASML's EUV equipment is essential for the production of high-tech semiconductors below 7 nm. The lackluster performance of ASML could mean that semiconductor companies are reducing their investment in high-tech semiconductors. This could lead to slower growth in high-tech sectors such as artificial intelligence and high-performance computing.

Semiconductor Equipment Industry-wide Challenges: ASML's underperformance could indicate challenges across the semiconductor equipment industry. Other semiconductor equipment companies are likely experiencing similar challenges to ASML.

Global Recession Possible: The semiconductor industry is one sensitive to economic fluctuations. ASML's underperformance may suggest a possible global recession.