ASML shares rose 2.91% in New York on a Tuesday in September after the company said Samsung and TSMC had agreed to use its newest chipmaking machines. Samsung will adopt the high-numerical aperture, or High NA, extreme ultraviolet lithography tools by 2028. TSMC will follow by 2030.
Barclays analysts called the news a “positive” for High NA machines, which they see as crucial to ASML’s revenue growth.
ASML is the only company that makes extreme ultraviolet machines, which are needed for the most advanced chips in AI, smartphones and high-end computing. That monopoly has helped lift its stock 126% over the past year. The more AI demand grows, the more data centres get built, and the more of ASML’s machines are needed to print the chips inside them. Wall Street expects trillions of dollars in AI spending for years.
What High NA changes
ASML brought out its Low NA EUV machine in 2013, and it is now widely used. High NA prints smaller features with more precision. For chipmakers that means more transistors on each chip, and more processing power.
The same day, ASML, Intel, Samsung and TSMC also agreed to double the size of photomasks, the template stencils that pattern silicon wafers with ultraviolet light, from 6 inches to 12.
Analysts see room for the stock to climb. Zacks Investment Research puts the average price target at $2,414, which implies about 40% upside.
The China question
ASML’s shares fell in late July after reports that a state-backed Chinese rival had started mass-producing ultraviolet lithography tools. JPMorgan called the selloff “disproportionate” and noted that China has made lower-end equipment for years “without any impact on ASML’s market share.” UBS analysts added last week that China is years behind and unlikely to rival ASML’s technology soon.
