Hopper58 schreef op 27 november 2024 15:43:
Donald Trump Assumes Office in Fewer Than 60 Days. It's Clear Investors Expect Something Big From These 3 Stocks.
By Jake Lerch, Justin Pope, and Will Healy – Nov 27, 2024 at 8:00AM
Trump needs this Dutch company to become a chip-manufacturing giant
Will Healy (ASML): Considering Donald Trump's inclination to put America first, focusing on a Dutch company like ASML may seem counterintuitive.
Nonetheless, the interest in ASML makes more sense when one understands the critical role it plays in semiconductor manufacturing. ASML is the leading producer of extreme ultraviolet lithography (EUV) machines, the technology necessary to produce the world's most advanced semiconductors. That means any U.S. fabs will need this company's equipment to compete.
Not surprisingly, Taiwan Semiconductor Manufacturing Company (TSMC) relies on ASML's technology to retain its dominance as the world's most advanced chip manufacturer. Consequently, an estimated 92% of the world's most advanced chip manufacturing takes place in TSMC's home country of Taiwan.
Concern about this industry concentration led the Biden administration to back $53 billion in industry subsidies through the CHIPS Act. To this end, TSMC, Samsung, Intel, Micron, and SK Hynix have received subsidies to construct advanced fabs in the U.S. with ASML equipment.
However, Taiwan's chip production dominance is also a problem for the U.S. because the island is a political target of China. Given Trump's adversarial relationship with China, moving advanced manufacturing back to the U.S. becomes all the more critical.
Additionally, these moves come at a time when AI has raised demand for semiconductors. Amid rising demand, ASML forecasts a compound annual growth rate (CAGR) between 10% and 20% in EUV lithography spending between 2025 and 2030 to produce advanced logic chips. For DRAM memory chips, the EUV lithography CAGR rises to 15% to 25% over the same time frame, implying ASML's growth should benefit its stock over time.
Still, ASML stock is down for the year as some customers temporarily slow spending on fab construction. This appears to present an opportunity for investors as its P/E ratio has fallen to 34, well below the five-year average earnings multiple of 43.
Ultimately, national security concerns and Trump's goal to make the U.S. a major chip manufacturer play into the hands of ASML shareholders. Knowing that, investors should take advantage of the discount on this chip stock before Trump's presidential term begins in earnest.
www.fool.com/investing/2024/11/27/don...