ASML and Related Stocks Surge After TSMC's Capital Expenditure Forecast

On Thursday, shares of semiconductor equipment manufacturers saw considerable increases, notably ASML, Lam Research, Applied Materials, and KLA Corp. This rally was sparked by an encouraging announcement from Taiwan Semiconductor Manufacturing Co. (TSMC), the largest contract chipmaker worldwide, which revealed that its capital expenditure (capex) plans for the coming year exceeded analyst expectations.

TSMC's American Depository Receipts (ADRs) jumped over 4% in premarket trading in the United States after the company projected a capex guidance range of $38 billion to $42 billion for 2025. This forecast is significantly higher than the average analyst estimate of approximately $35.1 billion. The positive outlook has had a beneficial impact on US and European companies involved in semiconductor equipment, indicating a potentially thriving year ahead for the semiconductor sector.

ASML, a major player in the semiconductor equipment industry, experienced a 4% rise in its stock price. The company is recognized for its cutting-edge lithography systems that are essential in chip manufacturing. As TSMC intensifies its investments in advanced packaging, ASML stands to gain. Advanced packaging contributed more than 8% to TSMC's total revenue in 2024 and is projected to increase to 10% this year.

Additionally, TSMC plans to allocate between 10% and 20% of its 2025 capex towards advanced packaging, as well as testing and mask-making, compared to about 10% dedicated to similar areas in its 2024 capex. This strategic move emphasizes the rising significance of advanced packaging technologies within the semiconductor industry.

Moreover, TSMC forecasts that sales of AI accelerators will grow at a compound annual growth rate of mid-40% over the next five years starting from 2024, indicating promising prospects in this segment.

The upbeat forecast from TSMC comes at a crucial time for ASML. Analysts have noted a decline in orders for ASML due to a downturn in the chip market, along with challenges faced by major clients like Intel and Samsung.

In the US market, stocks of KLA Corp rose by 3%, while Lam Research and Applied Materials saw increases of 3.2% and 3.1%, respectively. In Europe, besides ASML’s gains, BE Semiconductor, which focuses on advanced chip-packaging tools, climbed by 5%.

This rise in stock prices reflects a positive investor sentiment regarding the growth potential of the semiconductor equipment industry. With TSMC's ambitious investment plans, there may be increased demand for the products and services provided by these firms.

ASML, TSMC, stocks