ASML EUV spoils semiconductor equipment supply chain

ASML shares rose 7% on January 17th to close at 199.18, as ASML reported quarterly sales for the past 12 months, at $3.07 billion, a 53% year-over-year increase, exceeding its expected $5.22 billion. ASML achieved a profit of $770 million, far exceeding the analysis target of $544 million.

At the same time, Lam Research shares rose 7.7% to 205.08, Applied Materials rose 5.2% to 57.34, and KLA Tencor rose 5.4% to 113.49.

First of all, I will introduce ASML to the lithography industry first; then, I will interpret my view that ASML's profitability is good for Lam Research, Applied Materials, and KLA Tencor.

For mainstream IC industries such as logic devices and memory devices, there are only three lithography equipment companies that can use different technologies to achieve processes below 10 nm:

Netherlands ASML–EUV (extreme ultraviolet) lithography

Japan Nikon – immersion DUV (deep ultraviolet) lithography

Japan Canon – Nano Imprint Lithography (NIL)

Initially, all three companies started out as traditional optical lithography equipment, and their technology dates back to the 1980s. As Moore's Law evolves, their products are changing. As shown in Figure 1, a variety of techniques are available for replicating a photomask on a wafer surface.

ASML EUV spoils semiconductor equipment supply chain

In 2016, ASML, Nikon and Canon played a leading role in different industries. Figure 2 shows the I-line stepper market share. The I-line stepper offers the lowest resolution for all types of lithography tools, priced from $4 to $6 million. Most of the 79 tools sold were upgraded because they were in their early 1990s, but they are still being used in applications that require low resolution.

ASML EUV spoils semiconductor equipment supply chain

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