
This article was last updated on July 18, 2024
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ASML fell sharply on the stock exchange, investors worried about China and Trump
Chip machine maker ASML has had a tough day at the Amsterdam stock exchange. The stock, normally a darling among investors, was down almost 11 percent at the end of the trading day. The unrest appears to be at least partly due to a report of additional restrictions on trade with China.
That unrest started early this morning, almost an hour and a half before ASML released its latest quarterly figures. Bloomberg news agency reported that the US wants to tighten its thumbs further on the Netherlands in order to further limit exports. The US is said to be targeting the so-called maintenance contracts that ASML has with all customers to whom it supplies.
Machines can come to a standstill
Without these contracts, ASML employees cannot maintain the machines. If nothing is done in the event of a malfunction, for example, there is a risk that the machines will come to a standstill. With potentially major consequences for chip production. The US would like to intervene by using a rule that says that as soon as there is American technology in equipment, the country has a say in it.
A spokesperson for ASML does not want to comment on the news today. A spokesperson for the US National Security Council disputes Bloomberg’s reading.
Stock market analysts Jos Versteeg and Corné van Zeijl both think that this morning’s publication in Bloomberg has caused unrest among investors. “I wouldn’t worry too much,” says Versteeg. “ASML gets a lot of income from China, so the fear is that these restrictions will hurt. But the company also receives a lot of orders from other parts of the world. We could easily see an increase again next week.”
According to Van Zeijl, the latest quarterly figures were excellent and there was nothing to complain about. He sees a connection with the American presidential elections at the end of this year. “It is thought that things could get even worse under Trump. Everyone who owns ASML shares is now making a profit when they sell. Bad news may be coming and so there is now massive selling.”
New CEO’s baptism of fire
The Bloomberg article also led to a baptism of fire for new CEO Christhophe Fouquet in the conversation with analysts after the publication of the quarterly figures. Together with financial CEO Roger Dassen, he was asked four times about possible additional trading restrictions.
An analyst asked whether the company can make parts without using American parts or software. “That is a very hypothetical question,” Dassen tried to parry the question, while audibly searching for the correct wording.
The chief financial officer emphasized that the company has many activities in the US. “So to speculate about whether we could do it without American technology, I think it’s speculation that we shouldn’t and won’t get into.”
But it can be seen from the comments that Fouquet added afterwards that the subject is of great concern to the company. “I think we’ve said very clearly that we believe that preserving the ecosystem is a good thing for this industry. So I think that’s still the discussion that we’re trying to have with all stakeholders.”
Open trade with all countries in the world is of great importance to ASML and other parties in the sector. Also with China. Something the company has emphasized more often in recent years.
Trump statements
Not only ASML, but also the Dutch chip machine players ASM and Besi and the Taiwanese chip manufacturer TSMC were significantly in the red today. Trump’s statements are similar in an interview with Bloomberg to play a major role.
The former president and Republican presidential candidate said, among other things, that Taiwan should pay the US for protection. He also claimed that Taiwan has taken over “about 100 percent” of the US chip business. He also stated that the US is “nothing but an insurance company” for the country.
All sensitive statements. There have been fears for some time that China might want to invade Taiwan at some point. That would have huge consequences for the global electronics sector, which is largely dependent on Taiwan for the most computing-powerful chips.
And this would therefore also have major consequences for the global economy, which is becoming increasingly digital. In view of all the developments surrounding AI (artificial intelligence), this is only expected to increase.
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