Shares of ASML (NASDAQ: ASML) fell after technology publication The Information reported this week that an unnamed Chinese company backed by the Chinese government has begun manufacturing its own chip-making equipment. However, investors shouldn't be worried, as this is unlikely to hurt ASML's fortunes any time soon.
The machines reportedly being made in China are deep ultraviolet (DUV) lithography machines. This is an older technology used to manufacture older chips and the less critical components of advanced chips. DUV machines are also used to manufacture ordinary DRAM and flash memory. While ASML is a top supplier of DUV machines by a wide margin, it is not the only company that makes these machines. ***** anese companies Nikon and Canon also supply them.
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What separates ASML from the pack, though, is that it is the only company in the world with EUV (extreme ultraviolet lithography) technology, which is needed to make advanced logic chips and is also used to make high-bandwidth memory (HBM). These are extremely complex machines, and competitors outside China have largely given up trying to replicate the technology. These are also the machines that drive ASML's growth. EUV machines can cost more than $220 million apiece, while DUV machines can cost as little as $5 million, with higher-end advanced immersion DUV machines running closer to $90 million.
While a loss of DUV sales to China could impact ASML's revenue, the region now accounts for a smaller share of its overall revenue. The company is restricted from selling EUV and advanced DUV machines to China and is only allowed to sell older-technology systems to Chinese companies. As such, only about 14% of its sales came from the country last quarter. Meanwhile, there was already a bill in Congress set to prevent ASML from selling or servicing machines for the first three Chinese companies expected to receive these homegrown DUV machines, so this revenue was likely to be cut off regardless.
#machines #company
The machines reportedly being made in China are deep ultraviolet (DUV) lithography machines. This is an older technology used to manufacture older chips and the less critical components of advanced chips. DUV machines are also used to manufacture ordinary DRAM and flash memory. While ASML is a top supplier of DUV machines by a wide margin, it is not the only company that makes these machines. ***** anese companies Nikon and Canon also supply them.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
What separates ASML from the pack, though, is that it is the only company in the world with EUV (extreme ultraviolet lithography) technology, which is needed to make advanced logic chips and is also used to make high-bandwidth memory (HBM). These are extremely complex machines, and competitors outside China have largely given up trying to replicate the technology. These are also the machines that drive ASML's growth. EUV machines can cost more than $220 million apiece, while DUV machines can cost as little as $5 million, with higher-end advanced immersion DUV machines running closer to $90 million.
While a loss of DUV sales to China could impact ASML's revenue, the region now accounts for a smaller share of its overall revenue. The company is restricted from selling EUV and advanced DUV machines to China and is only allowed to sell older-technology systems to Chinese companies. As such, only about 14% of its sales came from the country last quarter. Meanwhile, there was already a bill in Congress set to prevent ASML from selling or servicing machines for the first three Chinese companies expected to receive these homegrown DUV machines, so this revenue was likely to be cut off regardless.
#machines #company
3 months ago
