This is Matt Reustle and today we are covering one of the most important technology companies in the world- ASML.
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.
Show Notes
(00:00:00) – Introduction
(00:02:44) – (First question) – The ASML backstory
(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