Europe’s chip stocks extended a punishing slide on Tuesday on fears of rising Chinese memory-chip competition and doubts about the financing behind the AI buildout — even as equipment giant ASML beat forecasts and said it cannot keep up with demand.
The Philadelphia Semiconductor Index fell 2.7% on Tuesday, while a specialist memory exchange-traded fund lost more than 3% — part of a six-day slide that also hit Asia’s Kospi overnight. The Wall Street Journal pointed to the catalyst: advances by China’s ChangXin Memory Technologies, known as CXMT, on denser DRAM designs, plus doubts about funding for the AI data-centre boom and comments by Broadcom’s Hock Tan on capital constraints.
The CXMT threat
CXMT has narrowed the technology gap with established memory makers, with progress reported on denser 4F-square DRAM designs. For an industry long protected by the tight oligopoly of Samsung, SK Hynix and Micron, a credible Chinese challenger scaling up is the textbook trigger for price wars. Investors read the rout as a demand signal for ASML, which sells the lithography machines every leading-edge fab needs, sending the shares down more than 3% in European trade on Tuesday.
There is a paradox at the heart of the move. ASML said on Wednesday that its planned production for 2027 and 2028 is effectively sold out and that customer demand exceeds what it can supply. The company raised full-year 2026 sales guidance to between 44 billion and 45 billion euros and forecast fourth-quarter sales above expectations, citing AI infrastructure demand with order interest stretching through 2030. Management also warned that further US restrictions on DUV equipment sales to China could prove counterproductive — a geopolitical overhang alongside valuation concerns after a sharp one-year rally.
Mixed print, mixed reception
The numbers themselves were mixed. ASML reported third-quarter net sales of roughly 11.7 billion euros — slightly short of estimates — while net income of 5.0 billion euros and earnings per share of about 14.50 US dollars beat forecasts, according to MarketBeat and Investor’s Business Daily. Gross margin is expected to hold near 56% on AI demand, but with investors already assuming strong spending, even a beat could not reverse the sector mood.
The industry question now splits in two. If customers answer Chinese competition by accelerating technology investment, ASML’s order book benefits. If memory-price pressure squeezes chipmakers’ profits, they may delay expansion — the classic downcycle playbook. The same China-demand story is cutting across the supply chain, from reported Chinese orders for Nvidia’s H200 chips outpacing supply to Tencent’s reported chip workarounds through Southeast Asia. With TSMC reporting on Thursday, traders get their next data point within hours.
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Sources: investors.com, marketbeat.com
