ASML – Riding the Cycle

ASML – Riding the Cycle

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:

Sales
€6,673bn
Decreased by 3.33% since the last quarter.
No. of Units sold
105 new units
7 used units
Lower by 2 new and 1 used unit since the last quarter.
Gross Profit
€3,462bn
Decreased by 2.31% since the last quarter.
Gross Margin
51.9%
Up from 51.3% since the last quarter.
Net Income
€1,893bn
Decreased by 2.52% since the last quarter.
Net Margin
28.4%
Up from 28.14% since the last quarter.

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.

Key Indicators
Index / Fund / Rate
Start of Year
Last Week
This Week
% Change YTD
Index / Fund / Rate
Lunar BCI WW Flexible Fund
Start of Year
141.43
Last Week
176.11
This Week
175.19
% Change YTD
23.87% Lunar Capital increasesymbol
Index / Fund / Rate
JSE ALSI
Start of Year
73 049
Last Week
72 920
This Week
70 198 Lunar Capital stocktake arrow down
% Change YTD
-3.90% Lunar Capital stocktake arrow down
Index / Fund / Rate
NASDAQ Composite
Start of Year
10 467
Last Week
13 407
This Week
12 984 Lunar Capital stocktake arrow down
% Change YTD
24.05% Lunar Capital increasesymbol
Index / Fund / Rate
S&P 500
Start of Year
3 840
Last Week
4 328
This Week
4224 Lunar Capital stocktake arrow down
% Change YTD
10.0% Lunar Capital increasesymbol
Index / Fund / Rate
Prime Lending Rate
Start of Year
10.50%
Last Week
11.75%
This Week
11.75%
% Change YTD
11.90% Lunar Capital increasesymbol
Index / Fund / Rate
USD/ZAR
Start of Year
16.98
Last Week
19.01
This Week
19.03 Lunar Capital increasesymbol
% Change YTD
12.07% Lunar Capital increasesymbol
Index / Fund / Rate
EUR/ZAR
Start of Year
18.44
Last Week
19.98
This Week
20.15 Lunar Capital increasesymbol
% Change YTD
9.27% Lunar Capital increasesymbol
Index / Fund / Rate
Brent Crude ($'barrel)
Start of Year
85.95
Last Week
91.12
This Week
92.16 Lunar Capital increasesymbol
% Change YTD
7.23%Lunar Capital increasesymbol
Source: Iress

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