This video will talk about another semiconductor player, and probably the most important, ASML (ASML -1.99%). We're going to have a look at its recent earnings report and what it's doing. This is the fourth semiconductor I've covered this month. We went over the comeback Intel is making, how AMD climbed the semiconductor ladder, and why Nvidia will join the trillion-dollar club.
What is ASML?
iPhones have chips that are designed by Apple and manufactured by TSMC, which uses ASML's systems. So what do these machines actually do?
Think of them as printers, very expensive printers. Each chip has many layers, and the EUV machine "prints" these layers. It takes around three to four months to build such a machine and about 100 or 150 people to assemble it and teach how it works.
ASML reported €4.0 billion net sales and €1.0 billion net income in Q2 2021, with net sales now expected to grow by around 35% in 2021. Q2 gross margin of 50.9% and net bookings of €8.3 billion are more than double net sales for the quarter. ASML also announced a new share buyback program of up to €9 billion to be executed by December 31, 2023.
Pros and cons
ASML's main competitor is its own previous systems. If the new system is not significantly better, what's the point of upgrading?
ASML also outsources a lot. So if one of its suppliers is not up for the job or has delays, that has negative effects on ASML and then on the rest of the industry. For example, the lenses and mirrors that ASML uses are from Carl Zeiss, and if that company can't deliver, ASML can't complete its machines.
Do watch the video below for the full insights.
*Stock prices used were the closing prices of July 23, 2021. The video was published on July 25, 2021.