ASML, 왜 반도체 장비 산업 대비 꾸준히 저조한 성과를 보일까? 🤔

It’s up 100% in the last year, what are you smoking bro

It’s a weird one. Like it along with TSM are (I think) obviously some of the most important companies in the world. In that they make the technology that all other new technology requires.

But, it’s slow. It’s low volume. New orders are chunky and uneven. Their products can’t ‘fly off the shelves’ because they’re huge and expensive and even their biggest customers only need a few of them. Hell there’s only a handful of companies that can even afford their products.

It’s kinda like say smartphones and the machines that build smartphones. You’d think hey smartphones made so much money, the companies that make the machines that make them must make even MORE money, right? But wrong. They’re just not the part of the production where most of the value gets added.

european stock that's why

The reason is because fabs capex grows slower than revenue. ASML revenue originates from the fabs capex. Why is capex in fabs always lower than revenue? Because they have an incentive to spend less on capacity, so they can capitalize on pricing power and stretch out demand for a longer period of time. Companies like TSMC are also sandbagging capex spending because they also assume most of the risk if the ai spending pulls back. This not only goes for ASML, but a bunch of other tooling in making semis, like LAM research/applied materials, testing (KLAC), etc.

Then can ASML just squeeze tsmc and charge more because they are a monopoly? I think the problem is that ASML's customers are very concentrated in several players, trying to squeeze the customers will also negatively impact ASML. ASML's supply chain is also apparently very tight. But the point is that the fabs themselves whether its memory, logic, etc. have the actual pricing power, and they are all incentivized to grow capex slower. They are able to because many of these companies operate in an oligopoly.

This is obvious if you understood finance. Returns come from earnings yield and valuation expansion. The earnings yield is a steady upward push and valuations depend on sentiment and growth.

While ASML’s machines and tech are amazing, it was already known to be, so valuations were high and earnings yield was low. If earnings yield is low, it means a lower percentage gain every year from the time you buy. If valuations are high there is less room for valuation expansion and growth needs to be much higher than expected.

AMAT, Lam, Klac, etc, all had lower valuations and higher earnings yield, so there was more room to gain for the same amount of growth and sentiment.

Their business is subject to export controls by the USG

Valuation is getting up there too

They make a single tool that, while essential to chip manufacturing, is their only product? Dunno. I've been wondering about this as well.

It’s in Europe. They’re constrained on manufacturing. There are a ton of startups that will steal all or most of their customer base. There’s lots of reasons.