They run on the rate of change of chip production. To make up for the loss of China chip production in the US/Europe would have to increase the rate of change ie grow exponentially.
Going forward how bad of a move this is for one of Europe's leading tech companies will be apparent IMO. It's all about the moat. The sanctions started to fill in the moat when they catalysed a massive investment on lithography in China, but did wonders to preserve the moat of Nvidia, Intel, ARM, etc by setting their Chinese counterparts back a decade.
EU chip production is negligible, the change rate is positive but again negligible (single 16nm fab). US has some spending but rely heavily on Intel. That says a lot. So, it's Taiwan and Korea. Though TSMC and Samsung are scaling up capacity, they won't do it to the scale as AI-bros want it. It's too big of a risk to have over-capacity in a downturn. This happened in the past several times and the industry learned to always stay couple of steps behind the hype. Similar to oil and gas industry.
I agree that their is no lack of demand for chips. But the cost of building a brand new fan, or even upgrading one is massive.
Were talking a small market of countries or super massive corporations that could possibly afford to build a fab.
The revenue is that eventually hardware needs to be replaced, and existing fans have to either upgrade or scale horizontally if they want to keep up with market and demands.
It seems sanctions levied against China are crippling ASML instead.
imo short lived. i dont see a huge slow down in chip production, so new labs needing new machines will have to be built => $$$
They run on the rate of change of chip production. To make up for the loss of China chip production in the US/Europe would have to increase the rate of change ie grow exponentially.
Going forward how bad of a move this is for one of Europe's leading tech companies will be apparent IMO. It's all about the moat. The sanctions started to fill in the moat when they catalysed a massive investment on lithography in China, but did wonders to preserve the moat of Nvidia, Intel, ARM, etc by setting their Chinese counterparts back a decade.
EU chip production is negligible, the change rate is positive but again negligible (single 16nm fab). US has some spending but rely heavily on Intel. That says a lot. So, it's Taiwan and Korea. Though TSMC and Samsung are scaling up capacity, they won't do it to the scale as AI-bros want it. It's too big of a risk to have over-capacity in a downturn. This happened in the past several times and the industry learned to always stay couple of steps behind the hype. Similar to oil and gas industry.
I agree that their is no lack of demand for chips. But the cost of building a brand new fan, or even upgrading one is massive.
Were talking a small market of countries or super massive corporations that could possibly afford to build a fab.
The revenue is that eventually hardware needs to be replaced, and existing fans have to either upgrade or scale horizontally if they want to keep up with market and demands.
The EU is at the start of a "mild" economic recession that will last for generations.
ASML has NL sized moat. They’ll be fine
So a buying opportunity? If the global market is fine and business fundamentals are fine this might be one of the fabled “buy low” opportunities.
Bingo