Navigating Semiconductor Innovations

This is Matt Reustle and today we are back covering the semiconductor value chain. ASML was once a forgotten subsidiary of Philips. Today, it's one of the most important technology companies in the world. To break down ASML, I'm joined by Tom Walsh, a portfolio manager at Baillie Gifford. Tom helps explain what's happening inside an extreme ultraviolet lithography machine, and how ASML came to pioneer this technology from the Netherlands. It was a non-traditional path to say the least. This breakdown pairs very well with our breakdowns on AMD, Qualcomm and Cadence. And I'd also highlight the Founders Podcast episode #8 on the Intel Trinity. Please enjoy this breakdown of ASML.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. 

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Show Notes

(00:02:44) - (First question) - The ASML back story

(00:06:14) - A deep dive into what semiconductors and Lithography are  

(00:08:04) - Alternate business directions ASML could have pursued 

(00:19:39) - How large ASML is in the industry today

(00:10:37) - A look into the management team over time

(00:14:03) - Moore’s Law and the key components of chip production

(00:15:09) - Overall size of the machines manufactured

(00:16:14) - The evolution of UV light and its important role in the advancement of Lithography 

(00:20:29) - Other competing companies within the field 

(00:23:10) - A detailed look into the cost of production industry wide

(00:24:04) - Unlocked innovations associated with the development technology 

(00:25:32) - The life cycle of a lithography machine

(00:27:04) - Revenue gained from new versus refurbished machines

(00:27:27) - The cyclicality of the ASML machine revenue

(00:29:32) - Potential production limitations due to capacity

(00:31:00) - Margin profile and how ASML sets prices

(00:32:33) - What the concentration of customers looks like

(00:37:00) - Reasons why an acquisition has not taken place to date

(00:38:42) - He explains where investor cash flow is directed

(00:40:01) - An investors perspective on ASML opportunities 

(00:42:24) - How milestones in new technology are regulated and measured

(00:45:40) - Potential business risks

(00:49:21) - Lessons he’s learned from studying ASML