Here are my top picks:

ASML $ASML (+1,23 %)

Intuit $INTU (-1,68 %)

Adobe $ADBE (-0,61 %)

Lockheed Martin $LMT (+0,73 %)

Microsoft $MSFT (+0,1 %)

Procter & Gamble $PG (+0,45 %)

Hershey $HSY (-0,46 %)

PepsiCo $PEP (-1,03 %)

Advanced Micro Devices $AMD (+3,55 %)

Diageo $DGE (+1,39 %)

Exxon Mobil $XOM (+2,32 %)

Canadian National Railway $CNR (+2,51 %)

Merck & Co. $MRK (+0,51 %)

Lam Research $LRCX (+0,85 %)

Novo Nordisk $NOVO B (+4,6 %)

Nike $NKE (-0,93 %)

Dollar General $DG (+0,51 %)

Estee Lauder $EL (+2,52 %)

Restaurant Brands International $QSR (-2,79 %)

Mondelez $MDLZ (-0,3 %)

Schlägst du zu? Falls ja, wo?

$LRCX (+0,85 %)

🔹 EPS: $0.92 (Est. $0.88) 🟢; UP +7% QoQ

🔹 Revenue: $4.38B (Est. $4.31B) 🟢; UP +16% YoY, +5% QoQ

🔹 Systems Revenue: $2.63B (Est. $2.77B) 🔴; UP +14% YoY

🔹 Customer Support-Related Revenue & Other: $1.75B (Est. $1.62B) 🟢; UP +20% YoY

🔹 Gross Profit Margin: 47.4% (Est. 46.98%) 🟢

🔹 Operating Income Margin: 30.5% (Est. 30.1%) 🟢

🔹 Net Income: $1.19B (Est. $1.14B) 🟢

Segment Breakdown

🔹 Systems Revenue: $2.63B (UP +14% YoY, +10% QoQ)

🔹 Customer Support-Related Revenue: $1.75B (UP +20% YoY, -1.4% QoQ)

Regional Performance

🔹 China: 31% of revenue

🔹 Korea: 25% of revenue

🔹 Taiwan: 17% of revenue

🔹 United States: 9% of revenue

🔹 Japan: 8% of revenue

🔹 Southeast Asia: 7% of revenue

🔹 Europe: 3% of revenue

Financial Metrics

🔹 Gross Profit: $2.07B (Est. $2.03B) 🟢

🔹 Operating Expenses: $739M (Est. $730M) 🔴

🔹 Cash, Cash Equivalents & Restricted Cash: $5.7B (-$400M QoQ)

🔹 Deferred Revenue: $2.03B (-$15M QoQ)

Q1'25 Outlook (March 2025)

🔹 Revenue: $4.65B ± $300M (Est. $4.34B) 🟢

🔹 Gross Margin: 48.0% ± 1% (Est. 47.00%) 🟢

🔹 Operating Margin: 32.0% ± 1% (Est. 30.1%) 🟢

🔹 EPS: $1.00 ± $0.10 (Est. $0.88) 🟢

CEO Tim Archer's Commentary

🔸 "Lam is executing at a high level at a pivotal moment for semiconductor manufacturing. Increasing demands on chip performance play into Lam's strengths, with advanced deposition and etch applications set to comprise a growing share of WFE."

🔸 "Our investments to win at key technology inflections are paying off, with more exciting opportunities ahead."

Overview of Semiconductor Manufacturing and Chipmaking Tools Markets

#semiconductor

#ai

#tech

#stockanalysis

#chips

Smartphones, smart cars, LED lighting displays, gaming devices, and countless other Internet of Things (IoT) devices all share a common foundation: semiconductors. These technologies wouldn't exist without semiconductors. The invention of the integrated circuit in 1958 sparked the Third Industrial Revolution, propelling the world into the digital age. Today, everything digital relies on semiconductors, making them the backbone of our increasingly connected world.

Digitalization is pervasive and is expected to continue expanding. As a result, the amount of data that needs to be stored, processed, and transmitted is growing exponentially. The rise of artificial intelligence (AI) and its integration into everyday workflows has further fueled the demand for computing power. To keep pace with this demand, semiconductor production must increase in both volume and capability. Additionally, the significance of the semiconductor equipment market cannot be overstated, as it plays a crucial role in enabling these advancements in semiconductor technology.

Moore’s Law, which predicts that computing efficiency should double every two years, highlights the need for continuous innovation in semiconductor technology to meet the demands of new and emerging technologies. According to Pat Gelsinger, CEO of Intel Corp., semiconductor manufacturing and design will play a role in global geopolitics over the next few decades, akin to the significance of oil production in the last 50 years.

The world faces a significant challenge: ensuring an adequate supply of advanced semiconductors. But who is responsible for this? Who are the key players in the semiconductor market? This article aims to unravel the complexity of semiconductor production and introduce you to the major companies and countries driving this critical industry. While my expertise in engineering is limited, I am confident that by the end of this article, you will understand why companies involved in semiconductor production are so attractive to investors.

—————————————————————————

Market Structure of the Semiconductor Industry

The semiconductor market is highly complex and structured around several key segments that encompass the entire supply chain. The market is structured as follows:

Design and IP (Intellectual Property)

• Fabless Companies: These companies focus on the design and development of semiconductor chips but do not manufacture them. They outsource manufacturing to foundries. Examples include Qualcomm $QCOM (+1,48 %) , Qualcomm $NVDA (+1,46 %) , and Advanced Micro Devices $AMD (+3,55 %).

• IP Providers: These companies develop and license intellectual property (IP) cores that are used in semiconductor designs. ARM Holdings, for example, licenses its processor designs to various chipmakers.

Semiconductor Manufacturing

• Foundries: These companies specialize in manufacturing semiconductor wafers and chips designed by fabless companies. They operate large-scale fabrication plants, often called fabs. Key players include Taiwan Semiconductor Manufacturing Company $TSM (+2,22 %) , GlobalFoundries, and Samsung Foundry.

• Integrated Device Manufacturers (IDMs): These companies handle both design and manufacturing of semiconductors. They own and operate their own fabs. Intel, Samsung Electronics, and Micron Technology are prominent IDMs.

Equipment and Materials Suppliers

• Semiconductor Equipment Manufacturers: These companies supply the machinery and tools required for semiconductor manufacturing, including lithography machines, etching equipment, and testing machines. Key players include $ASML (+1,23 %) ASML, $AMAT (+3,67 %) Applied Materials, and$LRCX (+0,85 %) Lam Research.

As requested by @HannahBaker : TYO: $8035 (+3,37 %) Analysis as of 17/11/2024.

6M: 📉 -0.48%

YTD: 📈 +9.96%

5Y: 📈 +33.55%

Company: Tokyo Electron is supplier of semiconductor production equipment (i.e., used to create semiconductor devices such as microprocessors, memory chips, integrated circuits) and flat panel display manufacturing equipment (i.e., used to create displays on tvs, phones).

Market Position: Key playe in semiconductor equipment market. Competes with $ASML (+1,23 %) , $LRCX (+0,85 %) , and $AMAT (+3,67 %). Would be positioned well for 5G, AI, Automotive Semiconductors, and QM.

Recent Developments: Increasing demand for advanced semiconductors has increased their B2B customer orders, mainly driven by Data Centres, AI, and IoT. However, Geopolitical tensions between Taiwan, China, and the rest of the world has added uncertainty due to possible restrictions on advanced chip exports (i.e., logistics halted).

MARKET CONTEXT

Macro Trends:

• Tailwinds: Accelerating adoption of AI, 5G, and advanced computing obviously boosts demand for their equipment. For example, here in Australia, they recently shut off 3G (https://www.telstra.com.au/support/mobiles-devices/3g-closure#:~:text=From%2028%20October%202024%2C%20the,VoLTE)%20including%20VoLTE%20Emergency%20Calling.)
• Headwinds: As mentioned above, geopolitical uncertainties may slow this down. Additionally, it was reported that China has spent more on chipmaking equipment to expand its semiconductor capacity (https://www.theregister.com/2024/10/25/mature_chip_output_china/#:~:text=While%20most%20industry%20attention%20is,in%202025%2C%20according%20to%20TrendForce.)

Competitive Landscape:

• Aside from what was mentioned above (i.e., China), $ASML (+1,23 %) 's dominant position in EUV lithography and $LRCX (+0,85 %) 's etching may cause a problem.

INVESTMENT THESIS

Bull Case:

• Sustained revenue growth mostly driven by demand for chip manufacturing.
• Shareholder-friendly policies (e.g., dividends, buybacks).

Bear Case

• Cyclical downturn in semiconductor demand could impact earnings.
• China's in-housing of development (i.e., they may increase supply.
• Heightened geopolitical risks from US/Taiwan and China tensions.

Notes:

• I did not include a financial analysis as I am not trained in that (Any experts, I would love to hear your thoughts).
• I do not own any investments of the companies listed on this post.
• I hope you found this insightful.

U.S. CHIP TOOLMAKERS PUSH SUPPLIERS TO CUT CHINESE TIES - WSJ

Applied Materials $AMAT (+3,67 %) and Lam Research $LRCX (+0,85 %) have instructed suppliers to stop sourcing components or taking investments from Chinese entities, driven by U.S. government pressure to reduce China’s role in the semiconductor supply chain, per the WSJ. Suppliers failing to comply risk losing their vendor status.

These restrictions are expected to raise costs due to limited non-Chinese alternatives. Veeco $VECO (+1,52 %) has issued similar guidelines, mandating the end of Chinese supplier reliance by 2025. The shift basically reflects Washington’s increasingly strict stance on tech imports and concerns over China’s influence on U.S.-critical tech.

$LRCX (+0,85 %) | Lam Research Q1'25 Earnings Highlights:

🔹 Revenue: $4.17B (Est. $4.05B) 🟢; UP +8% QoQ

🔹 EPS: $0.86 (Est. $0.81) 🟢; UP +10% QoQ 

🔹 Gross Margin: 48.0%; UP 50 bps QoQ

🔹 Operating Income Margin: 30.3%; UP 120 bps QoQ

Q2 Guidance:

🔹 Revenue: $4.0B-$4.6B (Midpoint $4.3B; Est. $4.22B) 🟢

🔹 EPS: $0.77-$0.97 (Midpoint $0.87; Est. $0.85) 🟢

🔹 Gross Margin: 47.0% ± 1%

Key Operational Metrics:

🔹 Systems Revenue: $2.39B; UP from $2.17B in Q2 FY2024

🔹 Customer Support & Other Revenue: $1.78B; UP from $1.70B QoQ

Geographic Revenue Breakdown:

🔸 China: 37%

🔸 Korea: 18%

🔸 Taiwan: 15%

🔸 United States: 12%

🔸 Japan: 7%

🔸 Southeast Asia: 6%

🔸 Europe: 5%

Balance Sheet & Cash Flow:

🔹 Cash, Cash Equivalents, and Restricted Cash: $6.1B (vs. $5.9B QoQ)

🔹 Deferred Revenue: $2.05B (vs. $1.55B QoQ)

🔹 Capital Expenditure: Continued investments to support long-term technology inflections

Strategic Highlights:

🔸 Stock Split: Effective October 2, 2024 (10-for-1 split)

🔸 Technology Focus: Strong focus on etch and deposition technologies to enable next-gen semiconductors

🔸 Customer Support: Increased customer service and spares revenue via Reliant® product line

🔸 Deferred Revenue Growth: Increased deferred revenue in Japan due to acceptance-based accounting

CEO Commentary:

🔸 Tim Archer, CEO:

"Lam delivered another quarter of strong financial performance, ahead of expectations. As we continue to focus on etch and deposition technologies, we remain well-positioned to outperform wafer fabrication equipment (WFE) market growth in 2025 and beyond.