The BrainChip Holdings Ltd (ASX: BRN) share price is down in the trenches today. If it's any consolation, the deep cut appears to be from no fault of its own. Instead, it seems the artificial intelligence (AI) chip developer is guilty by association.
Nearing the final bell, BrainChip shares are fetching 24.5 cents apiece, descending 10.9% from yesterday's closing price. The dismal performance is shared across the technology industry today, with the ASX tech sector the worst-performing sector in the Australian share market.
While it's always hard to make a definitive link, there's a fair chance BrainChip and others are feeling knock-on effects from 15,000 kilometres away in the Netherlands.
Semiconductor fallout hits BrainChip shares
Have you ever heard of a company named ASML Holding NV (AMS: ASML)? The business sells photolithography machines, which are massively complex pieces of equipment responsible for making some of the most advanced computer chips in the world possible.
Foundries like Taiwan Semiconductor Manufacturing Company (TSMC) purchase these goliath-sized machines to bring chip designs from the likes of Nvidia Corp (NASDAQ: NVDA) and Advanced Micro Devices Inc (NASDAQ: AMD) to life.
Because of this supply chain, investors can gauge expected chip demand based on orders for ASML machines. Why? Quite simply, it's not a chicken-and-egg scenario; the photolithography machine must come before the chip.
So, with that in mind, you can imagine the concern when ASML's third-quarter net bookings were less than half the number analysts had anticipated. According to the accidental release, ASML recorded €2.6 billion in bookings versus the €5.6 billion expected.
It's worth noting ASML's earnings per share (EPS) and net sales both beat analyst expectations. However, bookings are more indicative of future demand because the metric quantifies commitments that are yet to be finalised.
The weaker outlook clearly spooked the entire industry, leaving investors questioning the robustness of AI demand. Sizeable declines were witnessed last night across some of the biggest names in the sector, including:
- Nvidia down 4.7%
- AMD down 5.2%
- KLA Corp (NASDAQ: KLAC) down 14.7%
- Applied Materials Inc (NASDAQ: AMAT) down 10.7%
But what about BrainChip shares?
The ASX-listed company has marketed itself on its potential utility for AI. As such, waning demand for computer chips implies a possible drag on BrainChip's parade. For BrainChip, the unease is amplified by its pre-commercialisation status.
Still, the BrainChip share price is up 36% year-to-date.
