ASML’s Earnings Miss Signals Trouble: Is TSMC Next in the Semiconductor Slump?

$ASML Holding NV( $ASML Holding NV(ASML)$ )$ $Taiwan Semiconductor Manufacturing( $Taiwan Semiconductor Manufacturing(TSM)$ )$ $NVIDIA Corp( $NVIDIA(NVDA)$ )$ $Apple(AAPL)$

The semiconductor industry is feeling the heat, and ASML’s latest earnings miss is sounding the alarm. On April 15, 2025, ASML Holding NV reported Q1 orders of €3.94 billion ($4.47 billion), a stark shortfall from the €4.82 billion analysts expected. With U.S. tariff threats looming and a sluggish chip market, all eyes are on TSMC, ASML’s biggest customer, which reports earnings tomorrow, April 17. Can TSMC weather the storm, or are we in for more turbulence? Let’s break it down with fresh insights, data, and trading ideas as of April 16, 2025.

ASML’s Q1 Miss: A Red Flag for Semiconductors

ASML, the Dutch titan of chipmaking equipment, dropped a bombshell this week. Its Q1 bookings missed estimates by nearly €1 billion, reflecting a broader slowdown in the chip industry. CEO Christophe Fouquet didn’t mince words, warning that U.S. tariff uncertainties are creating a “macroeconomic fog” that could impact demand. Despite this, ASML held its 2025 sales guidance at €30-35 billion, banking on AI-driven growth to pull it through.

The fallout was immediate:

ASML shares slid 5% on April 15, dragging down peers like ASM International and BE Semiconductor.
The ripple effect hit the broader market, with the Nasdaq dipping 1.8% this week amid tariff fears.

ASML’s struggles aren’t isolated. The semiconductor sector is grappling with overcapacity from pandemic-era expansions and cooling demand for non-AI chips. But with TSMC’s earnings on deck, investors are hungry for clarity.

TSMC Under the Microscope: What to Expect

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest chip foundry, is a linchpin for tech giants like Nvidia and Apple. ASML’s miss has investors bracing for TSMC’s Q1 results on April 17. Here’s the setup:

Tariff Impact: U.S. tariffs, temporarily sparing semiconductors, could still hit TSMC indirectly. Higher costs for end products like smartphones (where TSMC chips dominate) might dampen demand.
AI Demand Wobble: While AI chips remain hot, analysts are questioning how long the boom will last. Morningstar warns that tariffs could slow U.S. data center builds, a key TSMC growth driver.
Guidance Watch: TSMC projected mid-20% revenue growth for 2025, but JPMorgan predicts a slight trim to low- to mid-20%, citing tariff adjustments. Will TSMC pull guidance entirely?

TSMC’s stock is already down 18% in 2025, trading at a two-year low forward P/E. Posts on X reflect the unease: some users expect a strong earnings beat, while others fear a guidance cut could “crush” the stock.

The Numbers: ASML vs. TSMC Snapshot

Let’s put the players side by side as of April 16, 2025:

Table: ASML and TSMC Key Metrics

Note: TSMC revenue is estimated based on prior quarters; Q1 results due April 17.

TSMC’s lower P/E suggests it’s a better value play, but ASML’s monopoly on EUV lithography machines keeps it critical for the ecosystem.

Risks and Opportunities: What’s Next for TSMC?

Bear Case

Tariff Ripple Effect: Even with exemptions, tariffs on end products could cut demand for TSMC’s chips. A 5-7% demand drop is possible if consumer spending falters.
AI Slowdown: If AI chip demand cools, TSMC’s growth could stall. Nvidia, a key client, took a $5.5 billion charge this week due to U.S. export limits to China.
Capacity Concerns: TSMC’s $100 billion U.S. expansion might drag margins, especially with rising costs from tariffs on equipment like ASML’s machines.

Bull Case

AI Resilience: TSMC’s exposure to AI leaders like Nvidia gives it a buffer. Analysts still see 15-20% growth in AI chip demand through 2025.
Tech Dominance: TSMC’s lead over Intel and Samsung remains unchallenged. Its 57.8% gross margin in Q3 2024 shows pricing power.
Tariff Workaround: Temporary exemptions for chips and equipment buy TSMC time to pivot production or pass costs to clients.

My View: TSMC’s fundamentals are solid, but near-term volatility is likely. A guidance cut tomorrow could spark a 5-10% dip, but that’s a buying opportunity for long-term holders.

Charting the Damage:

Trading Play: TSMC in Focus

Buy on Dip: If TSMC dips to $120 post-earnings, scoop it up. Stop at $115, target $135 by Q3.
Hedge the Risk: Grab SPY $480 puts to cover broader market tariff fears.
Avoid ASML for Now: Its high P/E and tariff exposure make it less attractive until clarity emerges.

My Plan: I’m waiting for TSMC’s earnings. A strong report could lift the sector; a miss might push me to wait for $115 before jumping in.

What’s Your Take?

Will TSMC surprise to the upside, or is the semi slump here to stay? Are tariffs a dealbreaker for you? Share your thoughts and trades below—let’s navigate this chip crisis together!

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TSMC Beats and Leads! Chip Sector Rebound to Pick?

ASML delivered strong Q2 results but management warned that it may not be able to achieve growth in 2026. The stock fell 10%. Taiwan Semiconductor Manufacturing Co. reported a better-than-expected 61% jump in profit for the June quarter, bolstering confidence in the momentum of the global AI spending spree. TSMC expects Q3 revenue of $31.8-33 bln in its earnings call (vs Q3 2024 revenue $23.5 bln). TSM jumps 4% in the overnight trading and leads chip sector to rebound.

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