Oct 16 Reuters ASML39;s deep forecast cuts that sparked a global tech stock selloff signal overcapacity at chip factories rather than a slowdown in global semiconductor demand, analysts said.

While the weaker 2025 sales outlook from the chip equipment maker on Tuesday raised fears of faltering global semiconductor demand, several analysts pointed to inventory buildups at chip factories that stocked up on ASML39;s expensive tools during the pandemic and have become better at using them to produce a larger number of chips.

ASML39;s forecast was a lagging indicator of what has been playing out at these chip factories for months, analysts said.

The company39;s stock had on Tuesday plummeted to its biggest singleday loss in a quarter century. In results that the company inadvertently posted a day ahead of schedule, ASML said it expects 2025 total net sales of 30 billion35 billion euros, near the bottom of its previous forecast.

That had dragged down a large swath of the semiconductor industry because ASML has a nearmonopoly on critical tools used by TSMC, Intel, and Samsung Electronics to make advanced chips.

U.S. chip stocks, however, steadied on Wednesday, with Nvidia, Advanced Micro Devices and Arm rising between 0.2 and 1.1.

Spurred by blockbuster demand for chips during the pandemic, chipmakers had built extra capacity. That growth stabilized as supply chain issues eased, leaving them to wait to order new tools until their factories looked ready to overflow with…