ASML, BESI, and ASMI Plunge After Call to Slow Down AI

The Dutch semiconductor sector took a hard hit on Monday. ASML, BESI, and ASM International (ASMI) were languishing at the bottom of the AEX, with ASMI losing nearly 10 percent around noon. The reason lies not with the companies themselves. Investors are alarmed by a striking call from the AI sector to slow down the development of the most powerful artificial intelligence.

This strikes at the very heart of the growth narrative that has driven chip companies in recent years. If AI development slows down, the market fears that the massive investments in chips and data centers could also eventually slow down.

Around 12:25 p.m., the ASMI was down about 9.7 percent at 750 euros. BESI lost more than seven percent, and ASML fell about 5.6 percent to 1,395 euros. This makes the three Dutch chip companies by far the biggest losers on the AEX.

The sell-off is not limited to the Netherlands. In South Korea, memory chip manufacturer SK Hynix lost over 6 percent, and Samsung Electronics fell more than 4 percent. Japan’s SoftBank, a major investor in OpenAI, dropped about 10 percent.

Chip stocks are also under pressure in the United States. Before Wall Street opened, Micron lost about five percent, while Intel fell nearly six percent. Nvidia was down more than two percent.

The turmoil arose after Anthropic CEO Dario Amodei called this weekend for a slowdown in the pace at which the capabilities of AI models are being improved.

“We must slow the pace at which we improve the capabilities of AI models,” Amodei wrote.

Remarkably, he received support from competitors. OpenAI CEO Sam Altman said he agreed that AI companies should be more cautious about developing models at the absolute cutting edge. Elon Musk responded briefly: “Dario is right.”

For investors, the danger lies primarily in what might happen after such a slowdown. Technology companies are currently pouring hundreds of billions of dollars into data centers, chips, and other infrastructure to build increasingly powerful AI systems.

ASML benefits significantly from this indirectly. Major chip manufacturers such as TSMC, Samsung, and SK Hynix must expand their production capacity to meet the demand for advanced chips. This requires, among other things, ASML’s extremely advanced lithography machines.

BESI and ASMI occupy different positions in the same production chain. As a result, they, too, are sensitive to expectations regarding future investments in new chip capacity.

A slowdown in AI could therefore ultimately mean there is less urgency to build new capacity. It is precisely this possibility that, on Monday, seemed sufficient to prompt investors to sell off chip stocks en masse.

However, there is an important caveat. AI executives are not calling for a complete halt to development. Nor have Microsoft, Meta, OpenAI, or other major players announced that planned data centers are being scrapped.

Altman even emphasized on Monday that slowing down development is not the same as stopping it. According to him, progress will continue at a rapid pace, just not as fast as it would be without additional safety measures.

Ben Barringer of asset manager Quilter Cheviot also points out that demand for computing power still exceeds supply. As a result, he believes chip companies’ revenues need not be immediately affected if the development of new models slows down slightly.

Furthermore, ASML’s stock price decline is at odds with news about the actual demand for its machines. Reuters reported Monday that customers are, in fact, showing increasing interest in the Dutch company’s newest and most expensive equipment.

The current EUV machines, which cost about $200 million each and are crucial for the production of advanced chips, are virtually sold out through 2027. At the same time, customers are increasingly committing to the new High NA machines, which cost about $400 million each.

TSMC, Samsung, and SK Hynix have all indicated when they plan to use High NA in production. Intel is already using the machines and says it has processed more than one million wafers using the technology.

ASML CEO Christophe Fouquet therefore sees little reason to believe, for the time being, that the investment wave is over. “I don’t think we’re at the end of the AI boom, to be honest,” he told Reuters.

That makes Monday’s stock price drop primarily a clash between two expectations. Investors fear that a more cautious pace in AI will ultimately lead to lower demand for chips. At the same time, ASML’s current order books show that major chip manufacturers are, for the time being, rushing to expand and upgrade their production capacity.