ASML is the largest and most well-known company in the EUV market, which leads investors to wonder if there are any large ASML competitors.
In this article, we will compare ASML to some of its major competitors and see if ASML is a monopoly or not. We will look at how each company compares in terms of products, technology, and market share.
We will also explore each company's competitive advantages and see which one comes out on top.
Is ASML the only EUV company?
ASML is the leading company in the development and production of extreme ultraviolet (EUV) lithography machines. Currently, they are the only company with a commercial EUV system on the market. However, they are not the only competitors with Japanese companies in the market such as Canon and Nikon.
These two companies have tried to produce EUV machines specifically but have failed. Only time will tell if they will try again and look to receive a market share of the EUV lithography industry. All three compete in the DUV machine market, but ASML dominates the EUV market.
EUV lithography is a key technology for manufacturing semiconductor chips with smaller features and higher densities. These machines are important because they help create smaller and more powerful electronic devices.
ASML market share
ASML has a 90% share of the global market for EUV lithography machines, which are used by all major semiconductor manufacturers. This large market share gives ASML a big competitive advantage over its rivals. With a dominant market share and being an industry with high demand, ASML is in a good position. However, with more and more attention being brought to this industry, it will be interesting to see how ASML's competitors innovate in the future.
ASML competitive advantage
With a 90% market share of lithography systems, its dominance is unrivaled. ASML has been able to maintain this competitive advantage by investing in research and development, as well as acquiring smaller companies. They also have an enormous 'moat' as the technology is not easy to replicate at all.
In fact, it's praised as a potential Nobel prize-winner by industry experts. It's going to be extremely difficult for ASMLl's competitors to catch up. The complexity of its products gives it a strong competitive advantage. Another competitive advantage is their partnerships with their main customers.
These customers depend on ASML and are willing to pay the high price for one of their 300 million dollar machines. A few of their main customers such as Samsung, Intel, and TSMC actually own shares in the company.
This means they have financial incentives to purchase from ASML over any other competitor.
"And we are unique to our customers and those almost symbiotic relationships, some people say are worse than being married because you cannot divorce" - Peter Wennink (CEO of ASML)
Finally, the competitive advantage that ASML has is the market demand. Microchip demand is constantly increasing as new electronic devices are created. This puts ASML in a great position as they will always have customers willing to buy their products.
To sum it up, ASML has several competitive advantages that have allowed them to maintain a dominant market share. These advantages include their investment in research and development, partnerships with key customers, and the high demand for their products. With such a strong competitive position, it's no wonder that ASML is the leading EUV lithography machine company.
Is ASML a monopoly?
Yes, ASML is a monopoly when it comes to EUV machines but not on all microchip manufacturing machines. Other competitors also produce DUV microchip machines.
"Today, ASML has a monopoly on the fabrication of EUV machines, the most advanced type of lithography equipment that is needed to make every single advanced processor chip that we use today" - Chris Miller (assistant professor, international history. Fletcher School, Tufts University)
Semiconductor manufacturers such as Taiwan Semiconductor Manufacturing Company as well as US-based Applied Materials, Inc. depend on ASML for their manufacturing machines. ASML's product allows these two microchip manufacturers and others like them to continue operating.
Without ASML, these companies would have to find an alternative way of making chips. This shows the power ASML has as a monopoly for this specific technology.
Are Lam Research and ASML competitors?
While ASML and Lam Research are not direct competitors. Lam Research focuses more on etch and deposition equipment while ASML focuses on lithography machines. However, they are indirect competitors as both companies supply products that are essential for semiconductor manufacturing.
ASML vs Lam Research
Lam Research is the largest supplier of etching and deposition equipment. In contrast, ASML is the largest supplier of lithography machines. The difference is that Lam Research's products are more tailored for small-scale microchip manufacturing for specialized products such as smart cars.
ASML produces machines for other manufacturers to make microchips for everyday items that do not need small-scale specialization such as phones or laptops. While their product offerings are different, they both compete for the same customers - the major semiconductor manufacturers.
ASML has an advantage over Lam Research as they offer a unique solution to the marketplace, while Lam Research only offers etch and deposition equipment. This gives ASML a competitive edge as they are one of the best technologies for microchip manufacturing for their customers.
However, for some manufacturers with different kinds of products or have a lower budget, Lam Research may be a better option to provide exactly what they need. Both of these companies are publicly traded.
Are Applied Materials and ASML competitors?
No, ASML specializes in EUV machines while applied materials manufacture other equipment, and provides services and software for the manufacture of semiconductor chips. Applied Materials, Inc. is a leading supplier of equipment used to manufacture semiconductor chips as well as display panels for TVs and phones. ASML is the world’s leading supplier of lithography systems.
Applied Materials vs ASML
ASML is a company that is based in the Netherlands. Applied Materials is based in California. They both serve customers all over the world making them large international competitors. ASML is considered more valuable by investors, with a value of $353 billion when compared to Applied Materials of $121 billion.
ASMLvs TSMC
The largest customer of ASML is Taiwan Semiconductor Manufacturing Company (TSMC). TSMC is the world’s largest contract chipmaker. They make chips for companies such as Apple, Nvidia, and Qualcomm. ASML's lithography machines are essential for TSMC's manufacturing process as they use ultraviolet light to pattern circuits on silicon wafers.
TSMC is also a customer of Applied Materials as they use their deposition and etch equipment to make chips. While ASML offers a one-stop-shop solution for semiconductor manufacturing, TSMC still uses Applied Materials as a supplier for some of its equipment needs.
The supply chain:
ASML (microchip machine manufacturer) -> TSMC (microchip manufacturer) -> TSMC customers (electronic manufacturers) -> electronic user
ASML provides the machines that TSMC uses to make chips. These chips are then used in products made by TSMC's customers. In the complicated process of manufacturing electronics, the supply chain leads back to ASML.
TSMC is the largest chipmaker in the world and therefore its relationship with ASML is very important. It should be noted that these two companies are more like collaborators rather than competitors. TSMC owns a portion of the 25% of shares that ASML offered to raise funds alongside Intel and Samsung.
Publicly Traded ASML Competitors
Let's compare how ASML stacks up against its competitors when it comes to the public markets.
ASML Holding NV (NASDAQ: ASML)
- Market Cap: 254.60B
- P/E Ratio: 40.70
- Div Yield: 0.62%
ASML is a publicly-traded company with a market capitalization of $254.60 billion as of May 16, 2022. The stock has a P/E ratio of 40.70 and a dividend yield of 0.62%.
Lam Research (NASDAQ: LRCX)
- Mkt cap: 69.93B
- P/E ratio: 15.77
- Div yield: 1.19%
Lam Research is a publicly-traded company with a market capitalization of $69.93 billion as of May 16, 2022. The stock has a P/E ratio of 15.77 and a dividend yield of 0.62%.
Applied Materials, Inc. (NASDAQ: AMAT)
- Mkt cap: 113.35B
- P/E ratio: 17.96
- Div yield: 0.81%
Applied Materials is a publicly-traded company with a market capitalization of $113.35 billion as of May 16, 2022. The stock has a P/E ratio of 17.96 and a dividend yield of 0.81%. ASML has a market capitalization that is more than double that of its two main competitors, Lam Research and Applied Materials. Additionally, ASML's stock has a much higher P/E ratio and dividend yield.
Potential risks
TSMC owns half of the world's EUV machines. This shows that if ASML can maintain a strong partnership as their supplier, they are in a good position to succeed in the future. However, there can be a risk involved in the sense that TSMC may one day decide to drop the use of EUV machines entirely.
Another potential risk factor is that ASML's main competitors, Lam Research and Applied Materials, may one day innovate a new type of lithography machine that is simply better than EUV machines.
This is a risk that all companies face, and it's impossible to predict the future. If EUV machines one day become irrelevant as technology advances, ASML may lose its competitive advantage as the sole supplier of this product.
ASML does however offer a wide range of other products so even if this scenario happens, it won't mean they are completely out of business. It is worth noting that ASML's main competitor, Lam Research, has a market capitalization that is less than one-third of ASML's.
This is likely because ASML is the world's leading supplier of lithography systems while Lam Research is a leading supplier of equipment used to make specific microchips on a much smaller scale.
After weighing the pros and cons, the key takeaways are that ASML is a strong company with a competitive advantage in the EUV lithography space. They have a long-standing relationship with their largest customer, TSMC, and offer a wide range of products.
However, there is always the risk that technology will advance and EUV machines become irrelevant. With that being said, ASML is already working on a next-generation EUV machine called 'High NA' that will be available in 2025 for Intel to use.
Conclusion
ASML is the leading company in the development and production of extreme ultraviolet (EUV) lithography systems and as of right now, they are the only EUV company. The cost of one machine is $300 million and the company is known to be the most advanced and innovative business in the industry.
Many companies, unfortunately, cannot afford this price tag which leaves opportunities for competitors to develop a more cost-effective machine. This is important to know as the lithography market is constantly changing and evolving. ASML consistently pushes the limits of physics and continues to surprise market participants positively.
Although they have a monopoly over the market now, be aware of the competition so that you can make informed decisions about your investment decisions in this industry