Shares of ASML (ASML +2.05%) were soaring today as stocks jumped on news of a ceasefire in Iran.
ASML is the world's leading maker of lithography equipment to manufacture semiconductors, and the only maker of extreme ultraviolet (EUV) lithography machines. Due to that position, it earned a substantial tailwind from the broader jump in tech stocks as the ceasefire takes a significant step toward removing a major threat to the global economy.
ASML posted outsize gains today largely because of its exposure to the Asian market, where countries like Japan, South Korea, China, and Taiwan are heavily reliant on oil and gas coming out of the Strait of Hormuz.
Stocks in those markets surged today as Iran agreed to reopen the Strait as part of the ceasefire, and ASML stock was up 8.5% as of 1:00 p.m. ET as a result.
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What the ceasefire means for ASML
Asia is ASML's largest market, accounting for roughly 60%-70% of its revenue in a typical year, though ASML's business is volatile as it sells a small number of very expensive machines each year.
With oil and gas prices soaring, Asian economies were under threat from the closing of the Strait, and several Asian countries are rationing oil and gas because of the conflict.
ASML has yet to feel the direct impact of the energy crisis, but it likely would if the Strait remained closed. Among its biggest customers are Taiwan Semiconductor Manufacturing Co., based in Taiwan, and Samsung Electronics, based in South Korea. Any weakness at those companies is likely to impact ASML.
NASDAQ: ASML
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What's next for ASML
ASML hasn't experienced the same boom from AI that chipmakers have, but investors see it coming. For example, SK Hynix, another South Korean memory chipmaker, just agreed to buy $8 billion worth of equipment from ASML through 2027.
If the ceasefire leads to a lasting resolution, ASML will be a beneficiary, and the expected revenue should materialize.
