Recently ASML (NASDAQ:ASML) shares have been experiencing some volatility. ASML shares dropped as much as 12.1% in a week after Deutsche Bank changed its advice from hold to sell. It is not the downgrade that sparked the sell-off, but the content of the research note that worried investors. A market talk supplied by beurs.nl has been translated here.
High Volume ManufacturingAccording to Deutsche Bank high volume manufacturing (HVM), using EUV machines, is still far away and they use a wafer production of 2000 per day for commercial viable service of EUV machines, whereas ASML uses a figure of less than 1500 per day. This difference of 500 wafers per day means that Deutsche Bank foresees commercial viable service of EUV machines later in time, but does not explain how it calculated this number.
Intel proving Deutsche Bank wrongAnalysts labeled the EUV technology as a 'hype', but were proven wrong just weeks after when chip maker Intel ordered 15 EUV machines. The order, valued about $1.5bn at list prices, shows confidence in the machines.
EUV and Moore's Law
EUV technology is required to follow the trend of Moore's Law, using current immersion lithography would increase complexity and costs if the transistors are made even smaller.
ConclusionSo analysts of Deutsche Bank have been betting not only against the viability of EUV technology, but also against Moore's Law. Furthermore the analysts fail to see the long term impact and strong market position ASML has and are projecting too much of the EUV technology on the short term.
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