From Yahoo Finance · · 1m 30s
ASML vs TSMC: The real picks-and-shovels winner
One company makes the machines, the other runs them. Only one has a true monopoly.
In brief
One company makes the machines, the other runs them. Only one has a true monopoly. ASML's EUV monopoly means it profits regardless of who wins the chip manufacturing race, making it the purer picks-and-shovels play. Originally reported by Yahoo Finance.
TSMC and ASML both crush Q2
TSMC hit 40.2 billion in revenue, up 36 percent. ASML posted 10.65 billion, up 21.3 percent. Both benefited from AI-driven demand for advanced chips.
ASML's EUV monopoly is absolute
Every leading-edge chipmaker, including TSMC, Intel, and Samsung, must buy ASML's EUV machines. No competitor can make advanced chips without them.
“TSMC cannot manufacture a single leading-edge wafer without ASML's EUV and DUV machines.”
ASML is already booked through 2027
The company is nearly fully covered with low-NA EUV orders for 2027 and planning a 30 percent capacity expansion for 2028. It's preempting demand, not chasing it.
“We're not waiting. We're preempting.”
TSMC faces execution risk at each node
TSMC must stay two nodes ahead of Samsung and Intel to maintain dominance. Moving to 2nm will dilute gross margin by 3 to 4 percentage points in Q3.
ASML profits from any winner
Whether TSMC, Intel Foundry, or Samsung wins the manufacturing race, all must buy ASML's equipment. ASML's position is independent of competitive outcomes.
Valuation tells the real story
TSMC trades at a forward P/E of 20, ASML at 28. ASML's higher multiple reflects its structural advantage: steady shipments beat flawless execution every time.
The picks-and-shovels winner is clear
ASML is the purer picks-and-shovels play. It sells the tools everyone needs, regardless of who wins the chip race. TSMC must execute perfectly to compete.
What to remember
ASML's EUV monopoly means it profits regardless of who wins the chip manufacturing race, making it the purer picks-and-shovels play.
