ASML: Competing with Moore’s Law - [Business Breakdowns, EP.117]
Show notes
This is Matt Reustle and today we are back covering the semiconductor value chain. ASML was once a forgotten subsidiary of Philips. Today, it's one of the most important technology companies in the world. To break down ASML, I'm joined by Tom Walsh, a portfolio manager at Baillie Gifford. Tom helps explain what's happening inside an extreme ultraviolet lithography machine, and how ASML came to pioneer this technology from the Netherlands. It was a non-traditional path to say the least. This breakdown pairs very well with our breakdowns on AMD, Qualcomm and Cadence. And I'd also highlight the Founders Podcast episode #8 on the Intel Trinity. Please enjoy this breakdown of ASML. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors, and provider of Canalyst. Tired of calculating fully-diluted shares outstanding? Access every publicly-reported datapoint and industry-specific KPI through their database of over 4,000 driveable global models handbuilt by a team of sector-focused analysts, 35+ industry comp sheets, and Excel add-ins that let you use their industry-leading data in your own spreadsheets. Tegus’ models automatically update each quarter, including hard to calculate KPIs like stock-based compensation and organic growth rates, empowering investors to bypass the friction of sourcing, building and updating models. Make efficiency your competitive advantage and take back your time today. As a listener, you can trial Canalyst by Tegus for free by visiting tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes (00:02:44) - (First question) - The ASML back story (00:06:14) - A deep dive into what semiconductors and Lithography are (00:08:04) - Alternate business directions ASML could have pursued (00:19:39) - How large ASML is in the industry today (00:10:37) - A look into the management team over time (00:14:03) - Moore’s Law and the key components of chip production (00:15:09) - Overall size of the machines manufactured (00:16:14) - The evolution of UV light and its important role in the advancement of Lithography (00:20:29) - Other competing companies within the field (00:23:10) - A detailed look into the cost of production industry wide (00:24:04) - Unlocked innovations associated with the development technology (00:25:32) - The life cycle of a lithography machine (00:27:04) - Revenue gained from new versus refurbished machines (00:27:27) - The cyclicality of the ASML machine revenue (00:29:32) - Potential production limitations due to capacity (00:31:00) - Margin profile and how ASML sets prices (00:32:33) - What the concentration of customers looks like (00:37:00) - Reasons why an acquisition has not taken place to date (00:38:42) - He explains where investor cash flow is directed (00:40:01) - An investors perspective on ASML opportunities (00:42:24) - How milestones in new technology are regulated and measured (00:45:40) - Potential business risks (00:49:21) - Lessons he’s learned from studying ASML
Guests
Analysis: done · source seed