The semiconductor industry took the initial steps into 2024 with renewed confidence, shedding the remnants of the 2023 downturn and heralding a “turning point” for the $600 billion market.
Statistics from the Semiconductor Industry Association (SIA), representing most global chipmakers, revealed that global sales soared to $48 billion in November, registering an annual and quarterly upsurge for the first time in over a year. Monthly sales even surpassed the $50 billion mark in the first half of 2022.
The SIA’s World Semiconductor Trade Statistics unit projected a robust upswing in 2024, with global revenues predicted to climb by 13% to $588 billion
ASML: A Near-Monopoly
ASML Holdings (ASML) has emerged as Europe’s most valuable technology firm, enjoying a near-monopoly in the production of equipment essential for fabricating sophisticated semiconductors—a position that underscores the health of the industry. The company’s stock recently peaked after its order volume more than tripled in the last quarter. Despite the dampened utilization of semiconductor manufacturing capacity in the past year, ASML managed to boost its sales by 30% to nearly $30 billion.
The surge in orders for ASML’s top-of-the-line extreme ultraviolet (EUV) lithography machines was led by major players such as Intel, Samsung Electronics, and Taiwan Semiconductor, reflecting the profound impact of AI on the demand for these machines. AI’s significant role in driving ASML’s business, as indicated by CEO Peter Wennick, has further underscored the urgency for chipmakers to secure EUV lithography systems, particularly with the prolonged lead time on orders for ASML’s machines outstripping its manufacturing capacity.
ASML’s Stock Outlook
The rally of ASML’s stock to a record high exemplifies the firm’s pivotal role amidst the artificial intelligence (AI) boom. Driven by burgeoning demand for AI infrastructure, the company has garnered attention as a prime AI enabler.
Despite its seemingly expensive shares in the short term, trading at 40 times next year’s earnings, ASML’s future prospects highlight a compelling investment opportunity. With the pivotal role of AI in driving demand and the upcoming release of the High NA EUV lithography machine, ASML is positioning itself for significant growth in 2025. The company’s near-monopolistic position, essential technology for advanced AI-enabling chips, and a significant share in the semiconductor industry’s key segments further validate its strong long-term outlook.
Anticipating sustained growth and backed by its exclusive position in advanced lithography, ASML’s dominance remains unchallenged, promising a bountiful future in the AI-infused landscape of the semiconductor industry.
ASML’s competitive edge, set to outpace the overall semiconductor market, makes it an irresistible prospect for investors, warranting attention as its stock continues to flourish.
