The semiconductor industry is poised for explosive growth, driven by the increasing demand for artificial intelligence and the Internet of Things. At the forefront of this revolution is Taiwan Semiconductor Manufacturing (TSMC), the world’s largest independent semiconductor foundry. With a commanding 62% market share, TSMC is well-positioned to capitalize on the secular growth trend in the industry.
TSMC’s customers, including tech giants like Apple, Nvidia, and Qualcomm, are driving demand for advanced chips. To meet this demand, TSMC is investing heavily in its manufacturing capabilities, with a recently approved $30 billion investment plan to upgrade its facilities and expand its production capacity.
This investment spree is expected to continue, with analysts predicting that TSMC’s capital expenditures will reach $37 billion in 2025. This increased spending will likely benefit companies like ASML Holding, a Dutch semiconductor equipment giant that provides essential tools for making advanced chips.
ASML’s extreme ultraviolet (EUV) lithography machines are critical for manufacturing chips with small process nodes, such as 3nm and 2nm. With TSMC and other chipmakers lining up to purchase these machines, ASML’s order backlog has surged to 39 billion euros, exceeding its 2024 revenue forecast.
As the semiconductor industry continues to grow, ASML is poised to benefit from the increased demand for its equipment. With a dominant market position and a strong track record of innovation, ASML is well-positioned to capitalize on the trend towards more advanced and efficient chip manufacturing.
Investors may want to consider ASML’s stock, which is currently trading at a discount to its five-year average forward earnings multiple. With the company’s revenue expected to accelerate in the coming years, now may be a good time to buy into ASML’s growth story.
Leave a Reply