The business of selling the equipment that allows the Intels (NASDAQ:INTC) and AMDs (NYSE:AMD) of the world to make their chips has always been volatile and cyclical. But if what I'm seeing is accurate, it looks like things are getting even more unstable -- which probably won't be great news for shareholders of companies like ASML Holding (NASDAQ:ASML).

ASML had a fine, fine quarter and certainly surpassed expectations. Sales jumped 23% from last year (and 50% or so sequentially) and margins continued to expand. While operating income growth of 47% is good enough news in its own right, the backlog and pace of bookings was also very strong, suggesting that the market is better than people believed and/or ASML is grabbing more share from Nikon and Canon (NYSE:CAJ), which have divisions that compete in this industry.

The ever-present worry with a company like ASML, though, is the health of its customers. To that end, management did express some worries about overinvestment in the flash memory space -- and given the volatility in stocks like SanDisk (NASDAQ:SNDK) and M-Systems (NASDAQ:FLSH), they're perhaps not the only ones who are concerned.

My particular issue goes a little further, though. Namely, that I think the semiconductor space has gotten even harder to forecast. It seems to me that lead times and inventory levels have continued to get shorter and shorter, leading me to think that nobody has as good an idea about what the next quarter will look like, let alone the next year, as in prior cycles. What's more, when you consider how competitive these markets are, I can only imagine how difficult it is to create the budget forecasts necessary to sign off on big-ticket capital expenditures.

Fortunately, ASML is a time-tested player in this market. Moreover, I think that dealing with fabs like Taiwan Semiconductor (NYSE:TSM) and United Microelectronics does help cushion the cycles somewhat -- individual chip companies rise and fall, but these fabs seem to have a near-constant need for new machinery. All that said, I want a bigger discount on these shares before buying in. Owning cyclical stocks is a high-volatility/high-reward proposition, and I want a better price before taking on that headache.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).