The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities discussed here were, or will prove to be, profitable.
Inside Story: ASML
ASML is a holding in the Global Portfolio Trust, that we bought in 2022.
Dutch semiconductor manufacturing equipment company ASML, is the world’s top supplier of lithographic systems and the company’s technology is fundamental to the mass production of semiconductor chips.
A lithographic system projects light through a blueprint of the chip that will be printed, this is known as a ‘mask’ or ‘reticle’.
The company’s products are critical in enabling innovation and development in the semiconductor industry, helping to reduce the size and cost of chips as well as increasing their energy efficiency.
“The company’s products are critical in enabling innovation and development in the semiconductor industry, helping to reduce the size and cost of chips as well as increasing their energy efficiency.”
Producing the latest-generation extreme ultraviolet (EUV) lithography systems for the smallest, most advanced chips, a technology unique to ASML, and the older deep ultraviolet (DUV) systems for the largest. The chips from the older systems are vital for the renewable energy and electric vehicle industries.
ASML’s customers include some of the largest semiconductor foundries worldwide including TSMC, Samsung Electronics, and Intel. Industry analysts estimate that the semiconductor market is set to double by 2030 with sales increasing from US$0.6 trillion in 2020 to nearer US$1.3 trillion.
In ASML’s view, the high demand growth for advanced and mature chips is being driven by continued innovation, foundry competition and a drive towards technological sovereignty.
We believe ASML looks well positioned to benefit from a number of structural long-term growth trends reflected in our megatrend framework, particularly the transition to clean energy.
“Semiconductors will play an important role in the storage, consumption and distribution of energy, including new smart grids”
Green energy requires substantial and high-power semiconductors. For example, in energy generation, wind power requires ~€3,000 Euros of semiconductors per Mega Watt (MW) of power, and solar requires €4,000 Euros.
So, semiconductors will play an important role in the storage, consumption and distribution of energy, including new smart grids. And electric transport - particularlyautos – is another important source of growing demand. After all, electric vehicles use many more semiconductors than their internal combustion engine counterparts.
We have high conviction in this company and its growth potential.
Understanding EUV & DUV?
Extreme ultraviolet (EUV) lithographic systems are used to print superfine lines on the most intricate layers of a microchip. This high-resolution process makes the mass production of the world’s most advanced microchips possible. The process enables chipmakers to pack in even more and tinier transistors to make chips more powerful and energy efficient.
The less complicated layers can be printed using various deep ultraviolet (DUV) systems that are more cost-effective.
Important Legal Information
This information is issued and approved by Franklin Templeton Investment Management Limited (FTIML). It does not constitute investment advice.
It should not be assumed that any of the security transactions discussed here were or will prove to be profitable. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice.
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The opinions contained in this document are those of the named manager(s). They may not necessarily represent the views of other Martin Currie managers, strategies or funds.
Shares in investment trusts are traded on a stock market and the share price will fluctuate in accordance with supply and demand and may not reflect the value of underlying net asset value of the shares. The majority of charges will be deducted from the capital of the company. This will constrain capital growth of the company in order to maintain the income streams.