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ASML- Absolutely Solid Monopoly in Lithography- Ignoring hysteria & stupidity

ASML- Absolutely Solid Monopoly in Lithography- Ignoring hysteria & stupidity
by Robert Maire on 10-17-2023 at 8:00 am

ASML Monopoly

  • This past weeks over-reaction to Canon echoes the Sculpta Scare
  • Nanoimprint has made huge strides but is still not at all competitive
  • Shows basic lack of understanding of technology by some pundits
  • Chip industry has been searching for alternatives that don’t exist
Much ado about nothing much…..

This past week we saw a huge negative knee jerk reaction in ASML due to the announcement by Canon of a nano imprint tool. Somehow the market and many so called “analysts” got hot and bothered suggesting this would be the end of ASML as we know them. Not many people seemed to do any serious fact checking even a brief analysis prior to writing ASML’s obituary.

Perhaps there is just a natural schadenfreude in the market over companies that have a monopoly along with the associated high valuation. Maybe everyone just wants to see the top dog knocked off their pedestal, just a little bit.

The problem is that its not the case and ASML is as rock solid as ever and Canon will have in essence, zero impact on ASML’s business.

Echoes of the AMAT “Sculpta Scare Stampede Stupidity”

The Canon news was just a carbon copy of the same overreaction to the Applied Sculpta tool which was inappropriately introduced at the SPIE lithography conference even though its nothing more than an etch tool. Applied called it an imaging tool even though it is clearly not at all. People with zero technical understanding suggested that it was the end of double patterning and ASML’s tool sales would be cut in half.

Obviously this is the furthest thing from the truth and Applied was clearly trying to steal some of ASML’s value in the lithography world.

Now more than 6 months after the Scuplta scare it seems most investors have finally figured out it will have zero impact on ASML. Scuplta has not taken the market by storm.

Back when Sculpta was announced many pundits said it was an “existential threat” to ASML….this past week we have heard the same over exaggerated “existential threat” to ASML….NOT!

Much like the Applied Sculpta technology, the Canon technology has also been around for decades and has been struggling as a developing technology.

Nanoimprint has make huge strides but has very basic limitations

Canon got into the nano imprint business by buying Molecular Imprints of Texas in 2014. Molecular Imprints had been struggling for quite a while and never really got any significant traction. There was some early direction of using nano imprint to do surface modification of disk drive platters with micro patterns. Use in the semiconductor industry back then was a far off fantasy limited to repetitive patterns of memory devices.

Defectivity and alignment have been perpetual problems and limitations of nano imprint. We do applaud Canon in making excellent progress, by relentless engineering that Japanese firms are known for, in these and other areas but basic technical limitations still remain.

There could be some potential applications in memory for nano imprint which is more tolerant of defectivity issues than logic and runs at lower resolution but still quite a ways off from being a “real world” HVM (high volume manufacturing) solution.

DSA & multibeam are other “boogeymen” to be aware of

If 6 months from now, some company announces a breakthrough in DSA (directed self assembly) or multiple beam electron beam direct write systems that is touted as an “existential threat” to ASML, just go out and buy ASML’s stock in the face of stupid herd mentality……

DSA has also been around for decades as a lithography alternative with its own set of limitations comparable to nano imprint, being the always wished for alternative to standard lithography.

There is also direct write electron beam technology which while much higher resolution than EUV is millions of times slower, like copying a newspaper with a pencil rather than a printing press of EUV. There are attempts to use massively parallel pencils but obviously its still incredibly slow.

Lots of litho ASML wanna bees exist but nothing is real

As lithography costs go exponential the hope for alternatives grows

Part of the overreaction to non viable litho alternatives is that the cost of litho is growing exponentially and so is ASML’s monopoly.

We attend many industry conferences and keep up to date on the latest trends. We go out of our way and attend conferences that no industry analyst would ever attend let alone even know about such as the recent SPIE Photomask & EUV conference. DSA, nano imprint and other technologies are always discussed at such conferences but anyone serious in the industry knows that there are no viable alternatives anywhere near on the horizon that would impact ASML

There are still hopes and dreams of alternatives that intensify as current litho costs grow faster than any other semiconductor equipment segment.

We are also sure that China is trying harder than anyone else to come up with an alternative to current sanctioned litho tools. If DSA, nano imprint or direct write were viable, they would be doing it.

The Stock

Despite all the uneducated, hysterical, overreaction this past week over a “nothing burger” product announcement, nothing has changed at all for ASML due to the Canon announcement

Far bigger, real and more relevant issues are the global macro economic outlook, over supply in chips, the China sanctions etc; etc.

ASML’s monopoly and market position haven’t changed, the only significant variable remains the market itself.

ASML remains the most dominant player in the semiconductor equipment space by far and is appropriately valued as such.

Canon’s imprint threat is no more real than the monster under the bed….

About Semiconductor Advisors LLC

Semiconductor Advisors is an RIA (a Registered Investment Advisor), specializing in technology companies with particular emphasis on semiconductor and semiconductor equipment companies. We have been covering the space longer and been involved with more transactions than any other financial professional in the space. We provide research, consulting and advisory services on strategic and financial matters to both industry participants as well as investors. We offer expert, intelligent, balanced research and advice. Our opinions are very direct and honest and offer an unbiased view as compared to other sources.

Also Read:

SPIE- EUV & Photomask conference- Anticipating high NA- Mask Size Matters- China

Micron Chip & Memory Down Cycle – It Ain’t Over Til it’s Over Maybe Longer and Deeper

Has U.S. already lost Chip war to China? Is Taiwan’s silicon shield a liability?

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