Global Electronic Demand to Significantly Decline After First Quarter Order Drop, Warns Semiconductor Equipment Company ASM

Dutch semiconductor equipment manufacturer ASM has warned that global demand for electronic products is set to decline sharply following a drop in orders during the first quarter, reflecting increasing global economic uncertainty. As interest rates and inflation climb, consumer confidence has been impacted and the semiconductor industry is now facing a reduction in orders from some of its clients in the chip market. Chips are critical components for all products, from smartphones to medical equipment, and ASM's financial report shows that the trend of declining orders may continue.

During the company's Q1 financial results meeting, ASM's CEO Benjamin Loh stated that the memory market demand was weak and is expected to remain subdued this year. ASM has also lowered its revenue expectations for the second half of the year, indicating that sales may drop by 10% or more compared to the period from January to June 2023. According to the company's data, expenditure on wafer fab equipment is expected to drop by several percentage points in 2023.

Another Dutch semiconductor equipment company, BE Semiconductor Industries NV, has also reported weak demand from Chinese customers, which accounts for around 27% of the company's total revenue. Orders have declined by 21% compared to the previous quarter due to a reduction in demand for mainstream computation and hybrid bonding applications.

Analyst Sara Russo from Bernstein stated that memory chip manufacturer capital expenditures are decreasing, confirming ASM's expectations that demand will remain weak for the rest of this year. Furthermore, the decline in orders by 6% compared to the same period last year also reflects weak demand.

ASM's stock price in Europe plummeted 13% on Wednesday, marking its biggest drop since March 2020. Other chip equipment manufacturers also experienced a decline in their stock prices, with BE Semiconductor Industries falling by 3% before recovering. Last week, Dutch semiconductor equipment manufacturer ASML warned that demand signals from different end markets were mixed. Despite having a backlog of orders worth 38.9 billion euros ($42.9 billion), its first-quarter bookings fell by 46% YoY to 3.75 billion euros, causing concerns over the company's long-term prospects.

It highlights potential challenges in the semiconductor industry that may impact the supply chain of electronic components. It's important for them to keep up-to-date with industry news and anticipate changes in demand and supply to ensure they can meet their customers' needs effectively.