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Ruslan Idyrov

@Kaganly

1Sem.·

Overview of Semiconductor Manufacturing and Chipmaking Tools Markets

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 (+2,48 %) , Qualcomm $NVDA (+2,01 %) , and Advanced Micro Devices $AMD (-0,35 %).

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 (+0,43 %) , 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 (-1,59 %) ASML, $AMAT (+0,53 %) Applied Materials, and$LRCX (+0,38 %) Lam Research.

Materials Suppliers: These companies provide the raw materials necessary for semiconductor production, such as silicon wafers, chemicals, and gases. Companies like Shin-Etsu Chemical and SUMCO are major suppliers in this segment.

The combined revenues from all segments, along with contributions from smaller beneficiaries, make up the total semiconductor market. In 2023, the market was valued at $544 billion and is projected to grow to approximately $1.14 trillion by 2033, reflecting a compound annual growth rate (CAGR) of 7.64% over the forecast period from 2024 to 2033.

—————————————————————————

TSMC is the largest semiconductor manufacturer with over 70% of share of the market

In the semiconductor manufacturing market, Taiwan Semiconductor Manufacturing Company (TSMC) holds the largest share, accounting for around 60%. Samsung and GlobalFoundries have market shares of approximately 10% and 5%, respectively. These figures highlight that over 70% of the world's semiconductors are produced in Asia, with 60% coming from Taiwan alone.

In 2020, the COVID-19 pandemic disrupted global supply chains, and with semiconductor production heavily concentrated in Asia, even minor disruptions led to a significant chip shortage. This situation served as a wake-up call, exposing the world's heavy reliance on these critical components and the fragility of the supply chain. Consequently, the semiconductor market is highly sensitive to geopolitical tensions and economic conflicts, such as export/import tariffs and sanctions. These measures can restrict direct sales or limit manufacturers' access to essential raw materials and chipmaking tools, further exacerbating supply chain vulnerabilities.

—————————————————————————

Key Players in Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing Company NASDAQ: $TSM (+0,43 %)

TSMC is poised to cement its leadership of the industry by acquiring more advanced photolithography equipment in the coming decade. Data from SEMI highlights its ambitious trajectory, indicating a potential doubling of its advanced-nodes capacity in the coming eight years, the fastest among the leading trio of firms. TSMC has upgraded its technology node approximately every 24-36 months since 2014. TSMC's capital expenditure (CapEx) intensity is about 35% of its revenue. With an expected revenue growth rate of 8.5% annually over the next decade and maintaining a CapEx intensity of 35%, TSMC could potentially allocate around $400 billion to equipment investments during this period.

TSMC’s comprehensive suite of advanced packaging services, ranging from 2D to 3D solutions, is set to attract strong demand from leading chip designers such as Nvidia, Qualcomm, and Tesla. These services are expected to cater to key sectors including AI, cloud computing, and smartphones.

TSMC's sourcing strategy underscores its strong ties to leading global semiconductor suppliers, particularly those from Japan. In 2018-2022, of the 31 suppliers recognized by TSMC's outstanding-performance award, 14 were Japanese, reflecting a clear affinity. The US followed with seven suppliers and Europe with six. Among TSMC's top five suppliers by revenue, ASML, Applied Materials, Tokyo Electron and Lam Research have consistently won the excellence award for the past five years, underscoring their industry-leading positions and commitment to TSMC. As TSMC expands its manufacturing horizon, these key relationships suggest sustained and potentially increased order flows for the top-tier suppliers.

INTEL NASDAQ: $INTC (+1,8 %)

Intel's ambitious foundry plans under its IDM 2.0 strategy, which involves opening its manufacturing capacity to external customers, are expected to drive a significant increase in capital expenditures over the next few years. The company is poised to benefit from US government-led subsidies, particularly through the CHIPS Act, signed into law on August 9, 2022. This legislation provides $52 billion in incentives for semiconductor manufacturing and research in the US, offering crucial support amid escalating trade tensions with China.

In 2022, Intel’s gross capex was $25 billion, representing about 40% of its revenue. This figure is projected to rise to approximately 45% by 2032. Intel is expected to lead its semiconductor-manufacturing counterparts in gross capital intensity over the next few years, although it will remain behind leading peers in terms of absolute capex dollars spent. This investment is set to introduce a range of new technologies, starting with the integration of EUV tools in Intel 4, followed by advanced Foveros packaging, and ultimately the highly anticipated high-NA EUV technology with Intel 18A—a node designed to secure industry leadership for the company.

Beyond cutting-edge node manufacturing, Intel's expertise in packaging—including chiplets, glass substrates, and Foveros packaging—will be a key differentiator for its customers and a competitive advantage for suppliers. Intel is transitioning from its traditional role as an integrated-device manufacturer to become a leading manufacturing supplier for the fabless chip industry. This shift involves a more collaborative approach, with Intel acting as a customer, supplier, and even competitor to the same companies.

As Intel embarks on its first EUV lithography manufacturing node (Intel 4), suppliers of EUV-associated solutions are expected to become key partners, with ASML, the world’s leading EUV toolmaker, being particularly crucial. Although past contract awards do not guarantee future success, suppliers with a history of consistent and repeated contract wins are likely to continue benefiting from growing business with Intel. To date, Intel’s top suppliers have remained relatively stable, with Applied Materials, Tokyo Electron, Lam Research, and Senju Metal consistently securing major contracts.

Samsung

Samsung Electronics is expected to account for 20% of global chip investment through 2032, focusing on logic, DRAM, and NAND chips. The company aims to produce 1.4-nm chips by 2027 and is advancing with 5-nm, 4-nm, and 3-nm technologies. It leads in DRAM with EUV technology and may adopt high-NA EUV tools for 1-nm chips by 2030.

Samsung plans to expand production in the US with a $17 billion investment in its Taylor, Texas plant, aiming for 40,000 wafers per month by 2024, and potentially adding another facility by 2027. It might add up to nine fabrication facilities over the next 20 years.

Samsung's capital expenditure for chip manufacturing could rise to $50-$55 billion annually by 2032, up from $37 billion in 2022. The breakdown is projected to be 22% for DRAM, 34% for NAND, and 44% for foundry/IDM.

—————————————————————————

How Much Do Manufacturers Invest?

The semiconductor manufacturing business is highly capital-intensive. The growing demand for data collection, computation, and transfer drives the need for more powerful and energy-efficient chips. To meet this demand, manufacturers must continuously innovate their production processes, requiring substantial investments in fabrication facilities (fabs).

According to Bloomberg Intelligence, semiconductor makers’ capital expenditures could expand from $136 billion to $262 billion in 2032, about 1.9x its level in 2023, mainly because of robust shipments of logic chips. TSMC and Samsung will account for 43% of the industry’s entire capex in 2032.

—————————————————————————

Importance of Miniaturization in Chipmaking

Miniaturization in circuit devices focuses on fitting more transistors onto smaller integrated circuits, which leads to more cost-effective chip production and reduced power consumption. Since semiconductor power consumption is proportional to the square of the drive voltage, lowering the drive voltage results in a substantial decrease in power consumption, achievable through finer wiring patterns.

If transistors were 20 nm in size in 2014, they have already shrunk to 3 nm by 2024. The reduction in transistor size highlights the rapid pace of advancement in semiconductor technology.

Although the benefits of further miniaturization may diminish in terms of performance gains and cost efficiency, its impact on energy efficiency remains significant. Miniaturization will continue to be a crucial focus for semiconductor technology over the next 10-15 years, driving improvements in performance, cost, and energy efficiency.

Moore's Law, which predicts that the number of transistors on a chip will double approximately every two years, underscores the importance of miniaturization in meeting the increasing demand for computational power. This trend not only facilitates enhanced performance but also boosts power efficiency, making miniaturization a fundamental strategy for future advancements.

Additionally, miniaturization spurs innovation in fabrication tools. As transistors shrink, the precision and capabilities of manufacturing equipment must evolve accordingly. This continual upgrade of tools ensures that production processes remain state-of-the-art, supporting ongoing progress and innovation in the semiconductor industry. This is why Foundry business is very capital-intensive.

Growing capital expenditure in the absolute form implies the demand for chipmaking tools that manufacturers buy to maintain and renovate their fabs. So, the companies that supply the machinery and tools required for semiconductor manufacturing, including lithography machines, etching equipment, and testing machines will benefit from it. In order to understand the importance of each tool used in the semiconductors' production process, we need to explore the process of production itself.

—————————————————————————

Due to the constraints on the number of images in this post, I will pause here. However, in the next part of this article, I plan to dive deeper into the critical question: What do the leading semiconductor manufacturers need to meet the growing demand?

The answer lies in one key element—the equipment they must upgrade and innovate. In the upcoming article, I will explore the production process in greater detail, highlighting the advanced tools and machinery required to meet this demand. And trust me, without pictures, it will be hard to speak about.

Additionally, I will examine the key suppliers in this space and identify which companies stand to benefit most from the ongoing semiconductor boom. Stay tuned as we explore the technologies and players shaping the future of this high-growth industry.

Let me know in the comments or through reactions if you're interested in the continuation of this article! Your feedback will guide the next steps, so I’d love to hear your thoughts.

Source:

Bloomberg Intelligence

Precedence research

Statista

+ 4

Nico Uhlig

@RealMichaelScott

1Sem.·

From sand to chip: how is a modern semiconductor made?

Reading time: approx. 10min

1) INTRODUCTION

Since 2023 at the latest and the rapid rise of Nvidia $NVDA (+2,01 %) semiconductors and "AI chips" in particular have been the talk of the town. Since then, investors have been chasing after almost every company that has something to do with the manufacture of chips, driving share prices to unimagined heights. However, hardly any investors really know how complex the value chain is within the production of modern chips.

In this article, I will give you an overview of the entire manufacturing process and the companies involved. Even if many of you have a vague idea that the production of modern chips is complex, you will certainly be surprised by how complex it really is in reality.

2) BASIC

The starting point for every chip are so-called wafers [1] - i.e. thin wafers, which usually consist of so-called high-purity monocrystalline silicon. In the field of power semiconductors, which primarily comprises chips for applications with higher currents and voltages, silicon carbide (SiC) or galium nitride (GaN) has recently also been used as the base material for the wafers.

In the so-called front end the actual core components of the chips - the so-called dies - are created and applied to the wafers. The dies are rectangular structures that contain the actual functionality of the later chip. The finished dies are then tested for their functionality and electrical properties. Each die that is found to be good is then integrated into the so-called backend where the individual dies are separated on the wafer. This is followed by the so-called packaging. The individual dies from the front end are then electrically contacted and integrated into a protective housing. In the end, this housing with the contacted die is what is usually called a chip chip.

Now that we have a rough overview of the overall process, let's take a closer look at the individual processes involved in producing the dies on the wafer. This is the area in which most highly complex machines are used and which is usually the most sensitive.

3) FROM SAND TO WAFER

Before wafers made of high-purity silicon can even be produced and the actual process for manufacturing dies can begin, the actual wafer must first be manufactured in almost perfect quality. To do this, quartz sand, which consists largely of silicon dioxide, is reduced with carbon at high temperatures. This produces so-called raw siliconwhich, with a purity of around 96%, is not yet anywhere near the quality required for the production of wafers.

In several chemical processes, which are carried out by Wacker Chemie
$WCH (+1,9 %) or Siltronic
$WAF (-3,21 %) are used to turn the "impure" silicon into so-called polycrystalline silicon with a purity of 99.9999999%. For every billion silicon atoms, there is then only one foreign atom in the silicon. However, this pure polycrystalline silicon is still not suitable for the production of wafers, as the crystal structure in the silicon is not uniform enough. In order to create the right crystal structure, the polycrystalline silicon is then melted again and a so-called ingotwhich is made from monocrystalline silicon is produced. A comparison between raw silicon and the ingot can be found in the following image [3]:

This ingot is then sawn into thin slices, which are then the final wafers for semiconductor production. The best-known wafer producers are Shin Etsu
$4063, (-1,14 %)
Siltronic or GlobalWafers
$6488.

4) FROM THE WAFER TO THE DIE

The wafers described in the previous section can now be used to produce dies. The overall process for producing dies basically consists of applying a large number of layers using various chemical, mechanical and physical processes. The overall process (depending on the product) takes approx. 80 different layers on the wafer, requiring almost 1000 different process steps and 3 months
non-stop production are required [4].

A macroscopic analogy is useful here, which I have also taken from [4]. You can compare the overall process for producing dies with baking a large multi-layer cake. This cake has 80 layers and the recipe for baking consists of 1000 steps. It takes 3 months to make the cake and if even one layer of the cake deviates from the recipe by more than 1%, the whole cake collapses and has to be thrown away.

In the first process steps, the wafer is covered with billions tiny little transistors are created on the wafer, which are then all individually electrically contacted in the following steps. The final steps consist of electrically connecting the transistors to each other, resulting in a complete electrical circuit [4]:

Each individual layer of the approximately 80 layers in the die requires highly specialized processes, which can be roughly summarized as:

Applying masks: Photolithography, photoresist coating (applying photoresist)
Apply material: Chemical Vapor Deposition (CVD), Physical Vapor Deposition (PVD), Atomic Layer Deposition
Remove material: Plasma annealing, Wet annealing, Chemical Mechanical Planarization (CMP)
Modify material: Ion Implanting, Annealing
Material cleaning
Inspecting the layers: Optical, Microscopical, Focused Ion Beam, Defect Inspection

Apply masks

Ultimately, a mask can be thought of as an enlarged copy of the structure of a special layer in the die. These so-called photomasks are then scanned using so-called scanners or steppers "copied" in reduced size onto the wafer. The best-known manufacturer of such lithography systems is ASML
$ASML (-1,59 %). It is currently the only producer of lithography systems that make it possible to produce structures smaller than 10 nanometers on the wafer. In today's powerful and modern chips, such as those found in smartphones, AI chips and processors, the smallest structures are around 3 nanometers in size. Other manufacturers of lithography systems for larger structures (10nm and larger) are Canon Electronics
$7739 or Nikon $7731 (+1,29 %) .

The photomasks - i.e. the enlarged "copies" of the structures - are produced by companies such as Toppan $7911 (-7,06 %) , Dai Nippon Printing
$7912 (-1,09 %) or Hoya $7741 (-3,54 %) manufactured. Systems for cleaning the photomasks or for applying the photoresist are produced, for example, by Suss Microtec
$SMHN (+0,76 %) for example.

Apply/remove/modify/clean material

As can be seen in the overview above, there are a variety of methods and processes for modifying the material of a particular layer. As a result, there is a lot of different equipment that can handle a process very well with incredible specialization. The best-known and most successful equipment manufacturers include Applied Materials $AMAT (+0,53 %), LAM Research
$LRCX (+0,38 %), Tokyo Electron (TEL)
$8035, (-0,76 %)
Suss Mictrotec, Entegris
$ENTG (-0,55 %) and Axcelis $ACLS (-0,8 %).

The material - for example, highly specialized chemicals - is of course also required for production. Companies such as Linde
$LIN (+0,54 %), Air Liquide
$AI (-0,22 %), Air Products
$APD (+0,04 %) and Nippon Sanso
$4091 (+0,26 %) are major manufacturers of process gases such as nitrogen, hydrogen and argon.

Inspect

As mentioned, every single layer in the manufacturing process of a die must be perfect in order to obtain a functional die at the end. Any small deviation or foreign particles can impair the functionality of the die. As the function of the die can only be checked precisely on the finished die, it is advantageous to inspect the individual layers for defects and deviations during production. Special machines are required for this, which must be able to do different things depending on the layer. Manufacturers of such machines include KLA
$KLAC (+0,46 %) or Onto Innovation
$ONTO (-0,62 %).

The following applies to almost all of the companies mentioned in this section: the companies are highly specialized and have quasi-monopolies on the machines for certain process steps. quasi-monopolies. Suitable equipment therefore usually costs several million dollars. In addition, some of the systems are so complex that they can only be serviced by the manufacturer's own service staff, which results in recurring service revenues for every machine sold. As a rule, each machine requires several highly specialized engineers to ensure long-term stable operation.

5) FROM THE DIE TO THE FINISHED CHIP

Once the wafer has been processed, the dies on the wafer are checked for functionality. There is highly specialized equipment for this, so-called probers. These probers test each individual chip several times, if necessary, to check the functionality implemented in the design. Manufacturers of such probers include Teradyne $TER (-0,02 %), Keysight Technologies
$KEYS (+1,5 %), Onto Innovation or Tokyo Electron. These probers have to control each individual die, some of which are only a few square millimetres in size, and contact the corresponding much smaller test structures with tiny needles. The testing process is sometimes outsourced to entire companies that offer die testing as a complete package. One example of such providers is Amkor Technology
$AMKR (-0,58 %).

The processed and tested wafer is now sawn to obtain individual dies. The dies that are found to be good are then integrated into a protective housing in the backend. The dies that have not passed the functionality test are either sorted out or (depending on the error pattern) processed as a variant with reduced functionality similar to those with full functionality. After a final functional test in the package, the chip is ready for use.

6) FOUNDRIES, FABLESS & SOFTWARE

Now that we have an overview of the complex process of manufacturing a chip, let's zoom out a little further to understand which companies perform which tasks in the semiconductor industry.

It's funny that not once in the manufacturing process has the name Nvidia $NVDA (+2,01 %) or Apple $AAPL (+1,34 %) has been mentioned? Yet they have the most advanced chips, don't they?

The pure production of the chips is done by other companies - so-called foundries. Companies like Nvidia and even AMD $AMD (-0,35 %) are in fact fablessThis means that they do not have their own production facilities but only supply the chip design and let the foundries manufacture the actual chip according to their design.

The design of a chip is like the blueprint for production - the foundries then take over the recipe creation and the actual production. There is special software for designing chips. Companies known for this software include Cadance Design
$CDNS (+0,16 %) and Synopsys $SNPS (-1,06 %). But also the industrial giant Siemens
$SIE (-0,29 %) now also supplies software for designing integrated circuits. Synopsys also offers other software for data analysis within foundry production.

Speaking of foundries; the best known foundry is probably TSMC
$TSM, (+0,43 %) which is the global market leader in foundries. TSMC designs itself no chips itself and specializes exclusively in the production of the most advanced generations of chips. Another major player that also masters the most advanced structure sizes is Samsung $005930. In contrast to TSMC manufactures Samsung also produces its own designs. Other large foundries are Global Foundries
$GFS, (+0,33 %) which was originally a spin-off from AMD and the Taiwanese company United Micro Electronics
$UMC. (-0,79 %)

The best-known fabless companies - i.e. companies without their own chip production - are Nvidia, Apple, AMD, ARM Holdings
$ARM, (-2,66 %)
Broadcom $AVGO (+0,31 %), MediaTek $2454 and Qualcomm $QCOM. (+2,48 %) In the meantime Alphabet $GOOGL, (+0,94 %)
Microsoft $MSFT, (-1,05 %)
Amazon $AMZN (+0,26 %) and Meta $META (-2,23 %) have designed their own chips for certain functionalities and then have them manufactured in foundries.

In addition to foundries and fabless companies, there are of course also hybrid models, i.e. companies that take on both production and design. The best-known examples of this are, of course, companies such as Intel
$INTC (+1,8 %) and Samsung. There is also a whole range of so-called Integrated Device Manufacturer (IDM)which for the most part only manufacture their own designed chips and do not accept customer orders for production. Well-known companies such as Texas Instruments
$TXN, (-0,01 %)
SK Hynix
$000660,
STMicroelectronics
$STMPA, (-0,02 %)
NXP Semiconductors
$NXPI, (+0,87 %)
Infineon $IFX (-1,35 %) and Renesas $6723 (+2,12 %) are among the IDMs.

FINAL WORD

The aim of this article was to provide an overview of the complexity of the semiconductor industry. I do not, of course no claim to be complete, as there are of course many other companies that are part of this value chain. As Getquin thrives on active exchange, I'll give you some food for thought to discuss in the comments below the article:

feel free to link any other companies in the comments if you think I've forgotten any relevant ones
what was the most surprising new information for you from the article?
which companies from the article have you never heard of?
before reading the article, did you know approximately how a modern chip is produced and what steps are necessary for this?

In general, I can recommend the 20-minute YouTube video at [4] to any interested reader. It provides an excellent animated overview of the manufacturing process of modern chips.

Stay tuned,

Yours Nico Uhlig (aka RealMichaelScott)

SOURCES:

[1] Wikipedia: https://de.wikipedia.org/wiki/Wafer

[2] https://www.halbleiter.org/waferherstellung/einkristall/

[3] https://solarmuseum.org/wp-content/uploads/2019/05/solarmuseum_org-07917.jpg

[4] Branch Education on YouTube: "How are Microchips Made?" https://youtu.be/dX9CGRZwD-w?si=xeV0TYgJ2iwNOKyO

165

33 Commentaires

He-Man D.@He-Man

1Sem.

Anyone who has read everything please give a 👍🏻😉

•

Philip

@PhilT

1Mo·

As requested by @HannahBaker : TYO: $8035 (-0,76 %) 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 (-1,59 %) , $LRCX (+0,38 %) , and $AMAT (+0,53 %). 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 (-1,59 %) 's dominant position in EUV lithography and $LRCX (+0,38 %) '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.

5 Commentaires

Philip@PhilT

1Mo

@Memo0606 saw you also requested this

•

Homer

@Simpson

1Mo·

In February 2024, I opened a securities account with Trade Republic and started saving 60 "stable" stocks from the S&5 500 per month with the aim of beating the S&P ETF in the long term. Since May, more than 30 additional stocks have been added and have proven to be an excellent decision so far. Among others $SFM (-2,81 %)
$AMP (+0,61 %)
$CMI (-0,12 %)
$SNA (+1,15 %)
$FI (+1,27 %)
$PANW (-2,12 %)
$ANET .

There are now over 150 positions and not only 🇺🇸 shares (over 90%) in the portfolio but also a handful from 🇩🇪🇬🇧🇳🇱🇯🇵🇸🇬. They still have to prove their quality, but so far only 🇺🇸 stocks have delivered performance.

9 months since the start, my "ETF" can keep up quite well although the goal of beating the S&P500 has not yet been achieved. But I'm close and in July the gap was somewhat wider.

Conclusion: The popular dividend stocks have not provided performance in the portfolio as $JNJ (+0,03 %)
$KO (-0,4 %)
$PG (-1,24 %)
$PEP (+0,05 %) The popular growth stocks from the semiconductor sector have not yet been able to prove their quality either. $ASML (-1,59 %)
$SNPS (-1,06 %)
$KLAC (+0,46 %)
$LRCX (+0,38 %)
$AMAT (+0,53 %) The healthcare sector has also been somewhat disappointing. $ISRG (-0,89 %) and $SYK (+1,48 %) are positive exceptions here.

The usual suspects, on the other hand, have performed very well, although Microsoft is lagging a little behind. Otherwise, the financial sector and almost all stocks in the industrial sector have performed well so far.

Let's see how things continue to develop.😁

Aktien Stammtisch

@Aktien_Stammtisch

1Mo·

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

Applied Materials $AMAT (+0,53 %) and Lam Research $LRCX (+0,38 %) 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 (-3,75 %) 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.

Aktien Stammtisch

@Aktien_Stammtisch

1Mo·

$LRCX (+0,38 %) | 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.

9 Commentaires

Memo0606@Memo0606

1Mo

@SemiGrowth are you buying now? 🤯🤩 and I'll buy more?

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SemiGrowth

@SemiGrowth

2Mo·

$LRCX (+0,38 %) After the weak $ASML (-1,59 %) earnings, I took a quick look at Lam Research and noticed a few things:

Lam is quite attractively valued
Lam is particularly strong in 2 areas:
Asia (China 40%, Korea 18%)
Secondary semiconductors (memory, IoT, etc)
Lam has a significantly higher service share (than ASML) of approx. 40%

ASML has warned of weak China and Korea sales, as sales are more likely to shift towards EUV and US (US accounted for almost 20pp more sales share than in the previous quarter)

This does not bode well for LAM. We could see weak numbers here in 3 days (earnings) as Asia and secondary semiconductors are not performing.

However, LAM is also somewhat different:

There have already been share price losses
LAM presented strong figures last quarter (in contrast to ASML)
LAM is not so strongly restricted by the US authorities
LAM has a high service share, which should limit the downside potential

I would like to buy LAM, but not at this risk. That's why I'm waiting for the earnings to come in.

9 Commentaires

Memo0606@Memo0606

2Mo

yes i also find them attractive but unfortunately i already bought them 😅 a few days ago
if it goes downhill again I will buy more

•

Aktien Stammtisch

@Aktien_Stammtisch

2Mo·

Earnings next week 🗓️

9 Commentaires

2Mo

Awesome. The depot finally crashes again 🥴

•

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Techaktien

@Techaktien

2Mo·

The ASML share fell 20% after after poor quarterly figures and a lowered outlook. Major customers such as Samsung and Intel are buying fewer machines because they are postponing investments. Buy, hold or sell ASML? What do you think?

In the Podcast episode 61 "Buy High. Sell Low" we talked about ASML in detail. Link in the profile description.

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