By Nelson de Mestre | Associate Analyst at NAOS Asset Management
Podcast Review | Business Breakdowns: ASML: Competing with Moore’s Law
“Of all the competitive advantages that I’ve ever come across, I can’t think of one as more significant as ASMLs”
This podcast is interesting as it goes through a business that is difficult to understand on its face, but is mission critical. What makes the story interesting is that ASML, a Dutch business specialising in the manufacture of machines which are used to produce computer chips, started as a spin out of Phillips. At the time, in the mid-1980s, ASML had no revenue, was last in its competitor set, had no commercially viable product or even an office.
“ASML was spun out by Phillips, was a problem child and that failed to succeed ….A good portion of the workers didn’t want to be there, expecting the company to die”
Going forward from the 1980s to today:
“In2022 they produced Revenue of ~$21 billion (Euro) and a ~$6.5 billion (Euro)profit, after only selling 345 photo-lithography machines. It’s a low volume item, which is very very specialised, with their most expensive piece of equipment selling for north of $150 million euros a piece.”
Phillips sold half of their stake at the IPO and the rest in the years following ASMLs listing, with ASML now capitalised at $220 billion Euros. The podcast runs through ASMLs margin profile, capital-light model, integration with suppliers, the nature of the product, machine explanations, the industry itself and more.
Link to Podcast
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