ASML Holding NVASML

Morningstar Rating

Stock Research and Analysis

by Andy Ng

ASM Lithography is the top provider of tools used in the most critical semiconductor fabrication process. The in-depth technological expertise required to make these tools helps protect the firm's strong competitive position. Although ASML is the leader Read more

Bulls Say

ASML is a market leader and innovator in photolithography, an integral part of chip manufacturing.

The extensive technical expertise needed to develop lithography tools, which are highly complex and play a critical role in semiconductor manufacturing, serves as a barrier to entry.

ASML has focused on operational efficiency in recent years to improve profitability throughout industry cycles.

The modularity of ASML's lithography tools allow the firm's suppliers to focus development on specific key components of the systems, thereby allowing ASML to offer state-of-the-art technologies.

As a market leader, the firm has close working relationships with major chip companies, including Intel, where ASML is well-positioned for future generations of photolithography equipment. Read more

Bears Say

ASML depends on a handful of powerful customers and will sell only several hundred systems each year.

Dependence on a limited number of suppliers for key components exposes ASML to pricing power and possible disruptions to its supply chain.

The firm depends on the deeply cyclical semiconductor industry for demand.

ASML faces intense competition from Nikon and Canon. These rivals have better insight and customer relationships in their home market of Japan, where firms tend to prefer domestic suppliers.

ASML's margins and returns on capital have historically been inferior to other industry leaders', which we think is partly because of buyer and supplier power and partly because of operational inefficiencies. Read more

Strategy

ASML's strategy is to leverage its market leadership and technical expertise to provide superior tools for customers in order to generate profitable growth. The firm's modular approach to development Read more

Management

Eric Meurice replaced Doug Dunn as president and CEO in 2004. Meurice previously was an executive vice president of the television division of Thomson TMS. He has also held management positions at Dell DELL and Intel. Aside from executive vice president Read more

Profile

Founded in 1984 and based in the Netherlands, ASM Lithography is a leading manufacturer of photolithography systems used in the production of semiconductors. ASML markets Read more

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