Symbol
(ASML.AS)
Year Founded
1984
Headquarters
Veldhoven, Netherlands
Entered Global Strategy
2023
ASML
ASML (ASML.AS) is a global leader in the semiconductor industry that provides chipmakers with hardware, software and services to produce patterns on silicon through lithography. The company is the undisputed leader in extreme ultraviolet (“EUV”) lithography tools, machines that are essential for the production of advanced integrated circuits (“ICs”) or microchips. ASML is a core holding of the Jensen Global Quality Growth Strategy due to its exceptional competitive advantages that have resulted in a 100% market share in the most complex chip making tools, as well as its strong long-term growth and profitability outlook. Critically, ASML and its management team have a track record of value creation for shareholders.
Know What You Own
Fundamentally, the market has attempted to evaluate at least three ASML-specific developments over the last few months.
- Succession. Christophe Fouquet became CEO after the retirement of long-term CEO Peter Wenning (66) in April. We see Fouquet’s appointment as business as usual and a sign of continuity. Fouquet has been at the firm for 16 years, and he stands for a focus on driving innovation at the leading edge. Fouquet has been deeply involved in High NA delivery and thus should be well positioned to oversee the development of the next generation of Hyper NA tools. We expect that the new CEO will present his strategic vision for ASML at the firm’s upcoming capital markets day in November.
- Price negotiations. The market had concerns with some potential orderbook weakness revealed during ASML’s first quarter 2024 results. Separately, comments by one of the company’s customers praising its latest tools’ capabilities but questioning their high price contributed to temporary share price weakness. We believe that ASML and its key customers are interdependent and work well together in developing the next generation of tools. Nevertheless, every new (and more expensive) tool introduction is a price negotiation, but this is a normal course of action. We remain confident that material orders for ASML’s latest tools are in the process of materializing.
- Headquarters location. ASML is located in the small town of Veldhoven in the Netherlands. There have been rumors that ASML may move its headquarters to a different location, possibly even to the United States. We view such a move as unlikely, as ASML has spent decades building up a complex ecosystem of suppliers, engineers and research universities across Europe with Veldhoven as its center.
Outlook
We maintain strong conviction in ASML’s long-term prospects driven by its technological leadership, management quality and demand support from some of the most powerful secular drivers we currently see.
Strategy holdings are subject to change and should not be considered recommendations to buy or sell any security. Please click here to view a list of the Jensen Global Quality Growth Strategy’s current holdings.
The discussion of the specific security identified in this article is solely intended to illustrate the application of our investment approach. Our views expressed herein are subject to change and should not be construed as investment advice and are not designed or intended as a basis or determination for making any investment decision for any security. This information is current as of the date of this material and is subject to change at any time, based on the market and other conditions. Past performance is no guarantee of future results.
Jensen Investment Management, Inc., is an investment adviser registered under the Investment Advisers Act of 1940. Registration with the SEC does not imply any level of skill or training.
© 2024 Jensen Investment Management.
Interested in Learning More?
Related Insights
Jensen News & Insights
Air Products (APD), a holding in the Jensen Quality Mid Cap Strategy, has transformed the production and distribution of gases and chemicals into a highly successful enterprise.
Accenture, a leading global IT firm, stands as a cornerstone of Jensen’s Quality Growth and Global Quality Growth Strategies, reflecting our steadfast confidence in its fundamentals.
Microsoft’s deep and sustainable competitive advantages serve as a cornerstone of their success and is a demonstration of an unwavering commitment to quality.