asml's euv technology keeps it ahead in the chip race

2024-12-23 asml

Veldhoven, Monday, 23 December 2024.
ASML continues to lead the semiconductor industry with its advancements in extreme ultraviolet (EUV) lithography. This technology is crucial for maintaining its competitive edge and influencing future financial performance. ASML holds a monopoly on EUV lithography tools, essential for AI semiconductor manufacturing. Despite a 4% decline in stock value this year, the company is poised for growth. ASML has rated highly using Partha Mohanram’s P/B Growth Investor model, which focuses on low book-to-market stocks. The only criterion it failed to meet was advertising to assets. Meanwhile, the CHIPS and Science Act is boosting semiconductor manufacturing in the U.S., with ASML playing a significant role. The act aims to revitalize the industry and counter China’s advancements. ASML’s technology remains significant in the context of AI applications and upcoming market recovery, despite challenges in sales to China due to export restrictions.

Strategic expansion in the US market

A new $825 million federal EUV lab under construction at Albany NanoTech [2] marks ASML’s growing presence in the US semiconductor ecosystem. The facility will house the TWINSCAN EXE:5000, a cutting-edge lithography machine valued at $400 million [2]. This expansion aligns with the $52 billion CHIPS and Science Act’s objectives [2], strengthening ASML’s position in the US market while supporting the nation’s semiconductor manufacturing capabilities.

Export restrictions impact on global competition

ASML CEO Christophe Fouquet recently addressed the impact of US export restrictions, noting that the ban on EUV lithography machines to China could result in a 10 to 15-year technological lag for Chinese semiconductor development [3]. Despite these restrictions, ASML maintains its stance on continuing to service existing machines in China [3]. This position reflects the company’s careful balance between compliance with international regulations and maintaining its global market presence.

Market position and technological leadership

Despite a 35% decline from all-time highs [6], ASML’s fundamental strength remains evident in its 88% rating based on the P/B Growth Investor model [1]. The company excels in key metrics including Return on Assets, Cash Flow Operations, and Research Development investments [1]. This strong performance in growth metrics underscores ASML’s continued technological leadership, particularly as demand for advanced semiconductor manufacturing capabilities increases.

Emerging competition and innovation

While ASML maintains its EUV leadership, new developments are emerging in the field. Russia has announced work on an 11.2 nm wavelength EUV system [5], compared to ASML’s 13.5 nm standard. However, this alternative technology faces significant development hurdles, with lower throughput at 37% of ASML’s capacity [5]. ASML’s established ecosystem and continued innovation, including the introduction of higher-priced high numerical aperture EUV machines [6], reinforce its market dominance.

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ASML EUV technology