Chip Stocks Give Back the Rally

NEW YORK, Oct. 21 — ChipChip stocks rose on Wednesday, and then the reports came in. Lam Research, a maker of deposition, etch and cleaning equipment for chip factories, reported record quarterly revenue of $8.22 billion after the market closed, and said on its call with analysts that its forecast for the next quarter would have been higher but for constraints in its own supply chain.

Lam’s shares, which had slipped 1 percent during the session to $260.81, were down 7.4 percent when after-hours trading ended at 8 p.m., and on Thursday the main stock indexes in Seoul, Taipei and Tokyo gave back all of Wednesday’s gains and more.

In the session, the Philadelphia Semiconductor Index rose 1.97 percent to 11,505.56, the Nasdaq Composite 1.05 percent to 26,702.86 and the S&P 500 0.58 percent to 7,757.17. CNBC credited the gains to “blowout” results from SpaceX, whose shares rose 7.79 percent to $159.31, and to a raised revenue outlook from Supermicro, which rose 9.55 percent to $35.57. Nvidia gained 2.54 percent.NVDANasdaq204.64▼9.02−4.2%Nvidia · Friday’s session The chip index is still nearly 13 percent below its Oct. 6 close.

By Lam’s own account, what holds it back is supply, not demand. Remarks from Lam’s call quoted here are from a transcript published by The Motley Fool and carried by The Globe and Mail. Tim Archer, its chief executive, said Lam’s preliminary outlook was for more than $200 billion of spending on wafer-fabrication equipment in 2027, up from the “mid $150 billion range” this year, but that clean-room space and “supply chain constraints for certain components” would continue “to limit chip makers and equipment companies’ ability to fully meet end demand.”Wafer-Fab EquipmentThe machines chipmakers buy to make chips on silicon wafers. Lam began the year expecting 2026 spending in the “mid-$130s” of billions, Doug Bettinger, its finance chief, said, and has raised the figure three times since. Mr. Archer said customer visibility was “extending through 2028.”

Lam forecast revenue of $8.60 billion, plus or minus $400 million, for the quarter to December, against the $8.53 billion analysts expected, as CNBC reported it. Mr. Bettinger said that “this revenue guide would have been a bit higher if not for some near-term supply chain constraints that we are actively managing.” What Lam would have shipped in December, he said, “we will ship that in the March quarter.” September-quarter revenue was 54 percent above a year earlier, and GAAP earnings were $2.19 a share.

China supplied 35 percent of Lam’s revenue in the September quarter, up from 26 percent in June; in December its share will be “meaningfully down, driven by the domestic customers in China,” Mr. Bettinger said.Where Lam SellsBehind China, Korea supplied 20 percent of Lam’s September-quarter revenue, Taiwan 18 percent, Japan 9 percent, the United States 8 percent, Southeast Asia 6 percent and Europe 4 percent. Applied Materials and KLA, two other suppliers of chipmaking equipment, were down nearly 4 percent and nearly 3 percent at the end of after-hours trading, Nasdaq’s data show.

Texas Instruments, which makes analog and embedded-processing chips, also reported on Wednesday. Its third-quarter revenue rose 28 percent to $6.06 billion, and it earned $2.62 a share. TI’s sales to data centers rose about 95 percent from a year earlier and made up about 13 percent of its revenue, Haviv Ilan, its chief executive, said on TI’s call, according to The Motley Fool’s transcript.

TI’s prices are edging up. After a flat first half, “we did see some price movement, I would say, mainly on the analog side, in the second half,” Mr. Ilan said, calling it “a little bit of an uptick, not very significant for this year.” TI will say more about 2027 prices in January. TI would like to invest more in capacity, he said, but “we are seeing lead times extending on tools and everything, especially on the back end side.” It forecast fourth-quarter revenue of $5.80 billion to $6.30 billion. Its shares closed up 2.47 percent at $284.65 and gained about 1 percent after hours.

In Seoul on Thursday, the Kospi fell 3.52 percent to 5,533.77. SK hynix lost 5.49 percent, to 1.22 million won, and Samsung Electronics 4.03 percent, to 214,500 won, a day after each rose more than 5 percent. Yonhap put the fall down to profit-taking after Wednesday’s rebound, amid concerns over investment in AI. Lee Kyoung-min, an analyst at Daishin Securities, said Meta’s and Tesla’s results had failed to ease concerns over the profitability of AI investment, and that “the end of SK hynix’s share buyback program reduced a source of support for market demand,” as quoted by Yonhap.

The Taiex in Taipei fell 1.81 percent to 46,041.43, and Tokyo’s Nikkei 225 2.65 percent to 62,907.84. Tokyo Electron, which makes chipmaking equipment, fell 6.99 percent. Before dawn in New York, futures on the S&P 500 were down 1.02 percent and on the Nasdaq-100 1.8 percent, CNBC reported at 4:31 a.m.

Next Week

The next readings on the chip trade come on Oct. 28, when SK hynix holds its quarterly call at 9 a.m. in Seoul (8 p.m. Tuesday in New York) and KLA reports after the close. Microsoft and Alphabet report that day too, and the Federal Reserve ends a two-day meeting on interest rates. Amazon and Intel follow on Oct. 29, and AMD on Nov. 3.AMDNasdaq504.80▼61.62−10.9%Advanced Micro Devices · Friday’s session Lam plans a more precise forecast for 2027 on its January call, when, Mr. Archer said, it expects to “have a better view of clean room schedules, of supply chain constraints.”