By the close of the US stock market on Wednesday, Dutch lithography giant ASML.US (ASML.US)'s stock price had risen nearly 10% in the US stock market to close to 1041.34 US dollars, almost hitting a record high. European stocks rose more than 8% on the same day. Currently, the company's total market value in Europe is about 377 billion euros (410 billion US dollars). It has completely surpassed European luxury goods giant LVMH and ranked as the second largest listed company in Europe, after the “magic drug for weight loss” simeglutide manufacturers Nord and Nord. Furthermore, driven by a fervent wave of AI technology deployment by global companies, the stock price rise of Asmack, a lithography giant essential to Nvidia's high-performance AI chip production capacity expansion, may be far from over.
The core logic driving Asmack's stock price skyrocket in a single day is that Asma's spokesperson revealed that Asma will deliver the latest high-NA EUV lithography machine to its largest lithography customer, TSM.US (TSM.US), which has the title of “King of Chip Foundry,” before the end of this year. This news directly drives Asmack's stock price to soar. Asmack's newly launched core tool for chip manufacturing is Asmack's most powerful product to date. Each unit sells for an astonishing 350 million euros.
For investors in Asmack, the news made them optimistic about future sales expectations, as TSMC had previously expressed concerns about the high price of this lithography machine. On the other hand, TSMC is planning an OEM contract price increase, which may also be to have more capital to buy Asmack's most expensive lithography machine. Wei Zhejia, the new chairman and CEO of TSMC, has hinted that he is considering raising the OEM contract price for AI chips from chip design manufacturers such as Nvidia. He also said that he has discussed the price increase with Nvidia CEO Huang Renxun. Wall Street firm Goldman Sachs predicts that if TSMC were to raise prices, the most likely situation would be to simultaneously raise the pricing of advanced chip manufacturing processes and CoWoS advanced packaging.
Not long ago, Asmack's management predicted that due to strong growth in demand for cutting-edge logic chips used in smartphones, PCs, and artificial intelligence data center equipment, its total revenue target for 2025 is 30 billion euros to 40 billion euros, and they are optimistic that the entire chip industry is already in a recovery cycle.
According to a research report published by the investment agency Jefferies, demand for lithographers is expected to continue to be strong until 2026, driven by governments around the world; Jefferies analysts expect that in the remaining three quarters of this year, Asmack's average lithography machine order size may be around 5.7 billion euros, and analysts also expect Asmack's total revenue to reach about 40 billion euros in 2025.
According to information, Intel (INTC.US), one of Asmack's top three customers (TSMC, Samsung Electronics, and Intel), has ordered Asmack's new EUV lithography machine, and Asmack shipped the world's first high-NA EUV lithography machine to Intel's large chip manufacturing plant in Oregon at the end of December 2023.
Lithography machines are entering the “high-NA” era, and Asmack's new revenue generation opportunity has arrived
Asmack's “high-NA” grade extreme ultraviolet (EUV) lithography system can be used to print semiconductors with lines that are only 8 nanometers thick — 1.7 times smaller than the previous generation EUV machine. According to Asmack's vision, this new EUV will be used in the future to produce high-performance advanced process chips that provide a strong driving force for artificial intelligence applications such as ChatGPT and AI smartphones to the most advanced consumer electronics products.
However, Asmack's new chip-making machine costs an astonishing 350 million euros (about 380 million US dollars) each, and weighs the equivalent of two Airbus A320 aircraft.
Asmack from the Netherlands is the world's largest manufacturer of lithography systems, and the lithography equipment produced by Asmack can be described as playing the most important role in the chip manufacturing process. Asmack is the sole supplier of the most advanced extreme ultraviolet (EUV) lithography machines used by TSMC, Samsung, and Intel to manufacture high-end process chips.
If chips are the “pearl in the palm of the hand” of modern human industry, then a lithography machine is a necessary tool to produce this “pearl”. More importantly, Asmack is the world's only supplier of EUV lithography equipment required for chips with the most advanced manufacturing process, such as 3nm, 5nm, and 7nm chips. Therefore, demand from the largest customers such as TSMC, Intel, and Samsung for their products can be described as a weather vane for the health of the chip industry.
Needless to say, lithographers are the culmination of the field of human technology today. The reason Asmack from the Netherlands is capable of manufacturing the world's most advanced EUV lithographers is mainly because it brings together the best technical talents from the Western world, as well as the world's most advanced technological theories and customized processes for chip manufacturing equipment. Asmack, which has an EUV lithography machine, even has a reputation as the “pinnacle of human technology” in the field of science and technology.
Asmack's major customer Intel did not hesitate to spend huge sums of money to purchase this device last year. The core purpose is to strive to achieve the most advanced chip process routes of 2nm and below as soon as possible — that is, the most advanced chip process technology routes of 18A, 14A, and 10A planned by Intel. Chip manufacturing categories such as “18A” refer not only to the 1.8nm level chip planned by Intel, but also to the 3D chiplet advanced packaging process roadmap planned by Intel.
For TSMC and the 2nm and below node manufacturing technology currently being developed by Intel and Samsung Electronics, Asmack's high-NA EUV lithography machine can be described as very important. Compared to the standard EUV lithography machine currently produced by Asmack, the main difference is that it uses a larger numerical aperture. High-NA EUV technology uses a 0.55 NA lens, which can achieve a resolution of 8 nm, while the standard EUV technology uses a 0.33 NA lens.
Therefore, this new NA technology can print smaller characteristic sizes on the chip, which is essential for the development of process technology for 2nm and below chips, while for ultra-high-performance AI accelerators used in the field of AI training/inference, such as Nvidia AI GPUs, 2nm and below processes are essential for improving the computing power of AI systems. Currently, the Nvidia H100/H200 AI GPU mainly uses TSMC's 4nm process, while the newly launched Blackwell architecture AI GPU will use TSMC's 3nm process. It is expected that TSMC's 2nm or even 1.6nm process will be used in the future.
Rising chip manufacturing costs and technical complexity (such as the need to overcome quantum tunneling effects) make it more difficult to develop breakthrough chip processes below the 3nm advanced process. Intel is now facing a special challenge, as it is trying to regain its once unshakable advantage in chip manufacturing technology, with the support of high subsidies from the US government. However, Intel's ambitions in the chip field mainly rely on its chip foundry business division to start the company's new path of performance expansion, so Asmack's newly launched High-NA EUV is an essential core device.
Intel CEO Gail Singer said not long ago that the company's business transformation is progressing smoothly and will achieve a more advanced 18A process node “one step ahead” than competitors in the chip manufacturing field, while the 18A advanced manufacturing process will bring Intel back on par with competitors in terms of cost. By 2030, Intel expects its chip foundry to become the second-largest foundry in the world, and its scale may be only slightly lower than that of TSMC, the world's leading chip foundry.
With the strong support of the global AI boom, Asmack's stock price rise is far from over
Driven by the world's strong demand for high-performance AI chips, AI chip leader Nvidia (NVDA.US) recently released an overview of next-generation AI chips and a blueprint for future AI chips, which also prompted its rivals AMD (AMD.US) and Intel to release similar product planning blueprints. AMD must keep the performance of its AI chips competitive, and Intel must ensure that it keeps up with leader Nvidia in the AI race.
Notably, Nvidia is increasing its ambitions to increase the adoption rate of artificial intelligence outside of hyperscale cloud computing giants. For example, Nvidia CEO Hwang In-hoon's recent continuous mention of “sovereign AI capabilities” suggests a surge in demand for artificial intelligence hardware at the national level. Nvidia, the king of AI chips, is also seeking to achieve new growth in corporate and commercial needs by establishing an “artificial intelligence factory”. As a result, as chip companies in the field of artificial intelligence-based hardware, such as Nvidia and AMD, fully benefit from the gold rush, this unprecedented AI wave has begun to sweep through all walks of life around the world, and the popularity of investment in the semiconductor investment value chain may reach a new peak after a lapse of many years.
The core supporting artificial intelligence infrastructure can be described as the “EUV lithography machine” that Asmack has a complete monopoly on. This is the necessary hardware for data center AI chip leaders such as Nvidia and AMD to achieve their artificial intelligence ambitions. It is also semiconductor manufacturing equipment that TSMC must make greater efforts to expand AI chip production capacity. SK Hynix, the leader in HBM storage systems, and TSMC's “comprehensive cooperation in HBM4 development and next-generation packaging technology” also highlights the complexity of maintaining a leading position in the industry. There is no doubt that with the help of the AI boom, Asmack's EUV dominance will continue. As time goes by, the complexity of semiconductor manufacturing equipment will continue to increase, and Asmack EUV, which is essential for advanced chip manufacturing technology, may have an absolute monopoly advantage.
Wei Zhejia, who was officially appointed as the chairman of TSMC, recently supported the chip industry's recovery expectations, stressing that the AI boom is the core driving force. That is, driven by strong global demand for AI chips, the chip market size will grow by 10% this year, not including the huge memory chip portion. TSMC, which has the title of “King of Global Chip Foundry,” is currently at the center of the global artificial intelligence and chip manufacturing boom. As the only foundry in the world for Nvidia's high-performance AI chips, which dominates the world's AI chips, it can be described as holding up Nvidia's production capacity by itself.
In terms of AI chip market expectations, at the “Promising AI” press conference, Nvidia's strongest competitor AMD abruptly raised the global AI chip market forecast until 2027 from 150 billion US dollars to 400 billion US dollars, while the AI market size forecast for 2023 is only about 30 billion US dollars. I/O Fund, a well-known investment institution, expects the total potential market size of the global AI data center market to reach 400 billion US dollars in 2027 and 1 trillion US dollars by 2030
Research firm Gartner also predicts that the development of generative AI and LLM will comprehensively drive the deployment of high-performance servers based on AI chips in data centers. The agency expects total global AI chip revenue to reach about 71 billion US dollars in 2024, a significant increase of 33% over 2023, and is expected to reach 92 billion US dollars in 2025. All of the above means that chip manufacturers such as Samsung and TSMC need to expand production capacity to manufacture more AI chips, and update or purchase semiconductor manufacturing equipment in large quantities.
For example, upgrading to more advanced semiconductor manufacturing equipment with higher accuracy or higher technical requirements in terms of complexity — after all, AI chips have higher and much more complex logic density, more complex circuit design, and higher power and accuracy requirements. This may lead to higher technical complexity requirements in lithography, etching, thin film deposition, multi-layer interconnection, and thermal management, which in turn requires more advanced customized manufacturing and testing equipment to meet these requirements.
In view of the rapid increase in demand for artificial intelligence chips, Asmack's three major chip manufacturing customers, as well as memory chip customers such as Micron and SK Hynix, are expected to accelerate manufacturing technology transformation and chip production capacity expansion, especially AI chips and HBM memory chip production capacity. According to media reports, OpenAI CEO Sam Altman “proposed to cooperate with TSMC to build about 30 chip manufacturing plants” to meet the huge global demand for AI chips, and Asmack's lithography machine will undoubtedly play the most central role in manufacturing equipment in many chip factories.
Bank of America, a major Wall Street bank, released a research report saying that the current chip industry recovery cycle began at the end of 2023 and is currently only in the third quarter, which means that the strong recovery trend may continue until mid-2026. Bank of America analysts pointed out that after experiencing an extremely weak downward cycle, the chip industry will usually usher in a 10-quarter upward cycle, and this model has only just begun.
Bank of America mentioned in its research report that investors are advised to focus on the three major investment themes in the chip industry: cloud computing, automotive chips, and “complexity” (complexity). Among them, in the topic of complexity, Bank of America said that the growing complexity in the chip manufacturing field will fully support the rising valuations of chip manufacturers and semiconductor equipment suppliers, and Asmack, which can be called the “pinnacle of human technology,” undoubtedly also plays an important role in the “complexity” investment theme.
Wells Fargo is very optimistic about Asmack's future market in the US stock market. The agency gave Asmack a target price of up to 1,150 US dollars for 12 months (Asmack closed up to 1041.34 US dollars on Wednesday) and reaffirmed Asmack's “bullish” rating. In the European stock market, Berenberg gave Asmeros shares a target price of up to 1,100 euros for the same period (Asmeros shares closed at 943.60 euros on Wednesday), while Bank of America, which is very optimistic about the chip industry, gave Asmack a target price of 1,156 euros. The Bank of America also recently raised Nvidia's target price to 1,500 US dollars, ranking as the highest target price on Wall Street, which means that Nvidia can continue to “boom”.
This wave of chip industry recovery, led by AI chips, can be described as increasingly clear. According to data recently released by the American Semiconductor Industry Association (SIA), global semiconductor sales for the first quarter of 2024 totaled US$137.7 billion, a sharp increase of 15.2% over the first quarter of 2023. Regarding the semiconductor industry's sales forecast for 2024, SIA President and CEO John Neuffer said in the data report that overall sales in 2024 will increase by double digits compared to 2023.