Chip stocks fall on ASML forecast cut and potential US AI chip export cap

(Reuters) – U.S. semiconductor stocks fell on Tuesday after chip maker ASML cut its annual sales forecast and a report said the Biden administration is considering limiting sales of advanced artificial intelligence processors to some countries.

AI chip giant Nvidia fell 4.4%, falling from a record high in the previous session that had it on the verge of dethroning Apple as the world's most valuable company.

Tuesday's decline was expected to reduce the AI ​​chip major's market cap by about $138 billion to $3.25 trillion, widening the gap to Apple's $3.58 trillion valuation.

Other chip companies including AMD, Intel, Arm, Broadcom and Micron fell between 2.3% and 6.2%, dragging the Philadelphia SE Semiconductor Index down nearly 4% and weighing on the Nasdaq index.

ASML's US-listed shares fell 12% after the Dutch company apparently mistakenly reported results earlier than planned. It reported weak bookings, cut its forecast and suggested a slower recovery in chip demand outside the AI ​​sector.

“ASML's fat finger error is not in itself a cause for concern, but the contents of the press release did not make for reassuring reading for investors,” said Derren Nathan, head of equity research at Hargreaves Lansdown.

Separately, Bloomberg News reported on Monday that US officials are considering imposing a cap on export licenses for AI chips to certain countries – mainly the Persian Gulf region, citing national security concerns.

Washington is increasingly concerned that the Middle East could serve as a conduit for China to acquire advanced American chips that are banned from being shipped directly to the Asian country.

“With the AI ​​revolution expected to play such a large role in increasing productivity and enabling other technological advances, it is no surprise that the US wants to do everything it can to maintain its dominance,” said Danni Hewson, Head of Financial Analysis at AJ Bell.

(Reporting by Akash Sriram and Jaspreet Singh in Bengaluru: Editing by Tasim Zahid)