No Chat Today Plus A Couple Of Trade Alerts
EUV is a fascinating technology and there is a reason that no other chip equipment maker (aka SemiCap) like Lam Research (LRCX) or Applied Materials (AMAT) has been able to offer a competitor to ASML’s EUV machines.
First off, Cody’s out today so the Live Q&A Chat will be tomorrow, April 18, 2024, at 10:00 am ET in the TradingWithCody.com Chat Room or you can email us at support@tradingwithcody.com.
A couple of trades to note.
We picked up some more Tesla (TSLA) today and also started a new position in ASML (ASML), as it’s getting beat up today following earnings. We promise we won’t sell ASML next week as we did with Lululemon (LULU).
For those who may not be familiar, ASML is a Dutch company that manufactures chip-making equipment for the semiconductor industry. Importantly, they have a monopoly on extreme ultraviolet (EUV) lithography machines, which are the tools needed to make the most advanced chips.
EUV is a fascinating technology and there is a reason that no other chip equipment maker (aka SemiCap) like Lam Research (LRCX) or Applied Materials (AMAT) has been able to offer a competitor to ASML’s EUV machines. Moore’s law predicts that more and more transistors get crammed onto the same area of silicon, and that happens by making the size of the transistors smaller. At TSMC (TSM) for example, the company’s first chips were produced on a 3 micron (3000nm) process node in 1987, today, TSMC’s leading technology is made using 3nm technology. That’s three orders of magnitude of improvement in 37 years.
However, in order to get down to 7 nm and smaller, TSMC had to move to EUV machines made by ASML. 7 nanometers is smaller than all forms of natural light waves, and EUV machines create a special kind of light that enables even smaller transistors. They do this by vaporizing plasma in the machines, and then directing the resulting flash of light toward the face of the silicon wafer to create the ultra-tiny transistors. We still think the fact that we melt sand and turn it into chips that enable us to watch YouTube on our phones involves some form of voodoo magic!
The stock has been on fire for most of the year and it’s not necessarily cheap right here, but we don’t think this is a bad entry point. As always, we’ll give ourselves room to buy more lower.
