Oct 15 (Reuters) - Computer chip equipment maker ASML's

deep cuts to its 2025 sales forecast sparked a

sell-off in chip stocks on Tuesday over worries that global chip

demand may be faltering.

The weaker outlook could, instead, reflect some overcapacity

at chip factories that had already stocked up on ASML's pricey

tools during the pandemic and have become better at using them

to produce a larger numbers of chips, analysts said.

ASML's stock plummeted to its biggest single-day loss in a

quarter century on its downgraded forecast. In results that the

company inadvertently posted a day ahead of schedule, ASML said

it expects 2025 total net sales of 30 billion-35 billion euros,

near the bottom of its previous forecast.

That dragged down a large swath of the semiconductor

industry because ASML has a near-monopoly on critical tools used

by TSMC, Intel ( INTC ), and Samsung Electronics ( SSNLF )

to make advanced chips.

Spurred by blockbuster demand for chips during the pandemic,

these chipmakers built extra capacity. That growth stabilized as

supply chains eased, leaving them to wait to order new tools

until their factories looked ready to overflow with orders.

ASML's forecast was a lagging indicator of what has been

playing out at these chip factories for months, analysts said.

The company said in a statement that despite a boom in

AI-related chips, other parts of the semiconductor market were

weaker for longer than expected, leading companies that make

logic chips to delay orders and customers that make memory chips

to only plan "limited" new capacity additions.

Intel ( INTC ), TSMC and Samsung are pulling back on orders from ASML

because they have realized there is plenty of capacity, said

Dan Hutcheson, vice chair at analyst firm TechInsights.

Chip factory usage is around 81% this year, but

manufacturers tend to buy tools when that gets into the mid-90%

range, Hutcheson said. Intel ( INTC ) has slowed down its factory

expansion, which suggests Samsung and TSMC will also be

cautious, he said.

Chip stockpiles remain high, and chipmakers have become more

efficient with ASML's tools, meaning they can make more chips

without having to order more.

Handel Jones, CEO of International Business Strategies,

which tracks the chipmaking industry, has slashed the number of

steps where ASML's flagship machines are used, sometimes by

almost a third.

Jones said Samsung, for example, may be able to use cutting

edge chip-etching technology to reduce the number of steps using

ASML's flagship machines from five or six down to one or two.

If successful, Samsung could have significant excess

capacity for those machines, known as extreme ultraviolet

lithography machines, he said.

Jones said he had not changed any of his overall chip

industry forecasts, which call for booming demand for AI chips

and AI-specific memory chips.

"This is a short-term blip. In the long term, it's going to

be okay," Jones said.