Advanced Semiconductor Materials Lithography (now renamed simply ASML), is based in cycling country, The Netherlands and released their FY2023 Q3 results on Wednesday last week.
ASML manufactures the lithography equipment to mass produce semiconductor or more commonly called computer chips. Lithography allows one to “print” complex circuits onto silicone wafers creating a semiconductor chip. The process and materials used is highly complex and requires a very high level of precision.
In this last quarter, AMSL experienced a slowdown in new orders, after the significant growth post the Covid-19 slump and the significant take-up following the AI hype. However, ASML expects a significant increase their revenues in 2025.
Let’s look at ASML’s FY2023 Q3 results:
7 used units
Despite the slowdown in sales and profits, ASML is still highly profitable and still earns high margins. ASML is almost a monopoly in developing Extreme Ultraviolet Lithography (EUV) technology required to develop smaller (very, very tiny) but more powerful semiconductors or chips.
ASML’s largest client is TSMC (Taiwan Semiconductor Manufacturing Company) who is currently building new factories (or fabs as they are called) in the USA and Germany. This is to mitigate the tensions between the USA and China. In fact, just last week the Biden administration introduced stricter curbs on exporting advanced semiconductor to China. These new fabs will require AMML’s EUV and DUV (Deep Ultraviolet) lithography equipment to mass produce chips at these fabs. Hence, ASML’s positive view of significant increase in sales and profits in 2025.
The semiconductor industry is cyclical and subject to export restrictions.
ASML is held by Lunar Capital’s Offshore Portfolio clients and in the Lunar BCI Worldwide Flexible Fund.
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