To The Moon

Recently, semiconductor company stock prices have significantly pullbacked, among which: Lithography giant $ASML Holding NV(ASML)$ corrected 22.5%; $Applied Materials(AMAT)$ , the world's largest semiconductor equipment company, saw an 11% pullback; $Advanced Micro Devices(AMD)$ pullbacked 23.6%; Chip contract manufacturing giant $Taiwan Semiconductor Manufacturing(TSM)$ back 19.4%... What happened? Is this semiconductor pullback a buying opportunity? In general, the main reason for this wave of semiconductor pullback is that semiconductor fundamentals cannot match skyrocketing stock prices. For example, Applied Materials, before the correction, the stock price had been close to the all-time high set in January 2022, however, the company's performance is still on the downside, and the revenue is expected to decline 3.2% next quarter: ASML also mentioned in the second quarter that the semiconductor industry demand recovery less than expected. Companies, including ASML, had expected a recovery in the second half of 2023, but at present, all kinds of customers are cautious and the recovery is not expected until 2024, and the strength of the recovery is still unclear. In addition, ASML's EUV lithography machine growth is less than expected, previously management thought it would grow 40%, compared with the current forecast of only 25%, because advanced fab customers are worried about the industry outlook and delaying equipment purchases. ASML's earnings report was released on July 19, but on September 17, there were media reports that TSMC had temporarily delayed the delivery of some advanced chip manufacturing equipment in the face of uncertain market conditions. Earlier, Peter Wennink, ASML Chief Executive, told Reuters in an interview that some orders for its high-end equipment had been delayed, but he did not name specific customers. Now, the prosperity of semiconductors is not as optimistic as investors had expected. In terms of monthly revenue, TSMC's sales in August were NT $188.686 billion, down 13.5% from the same period last year, and the decline has widened from the previous three months: Although the recovery of semiconductor demand is less than expected, some areas have improved, such as Intel's recent stock price rose against the trend, and the management said in the second quarter that the PC market will continue to recover in the second half of the year! Lisa Su, AMD CEO, said at the Goldman Sachs Communacopia + Technology investor conference on September 5 that AMD's data center business will be very strong in the second half of the year! If the previous surge in semiconductors was that investors were too optimistic about semiconductor reversals, the current pullback needs to be a little too pessimistic. For example, although as ASML and TSMC forecast, they slowed the installation of advanced equipment, ASML raised the full-year 2023 revenue forecast in the second quarter. According to ASML's previous long-term guidance, the company is expected to reach 24-30 billion euros in 2025, and 21.17 billion euros in 2022. Gross margins are expected to rise from 50.5% to 55%. In the long run, as long as the production of high-end chips still need EUV lithography machines, and no second company can produce EUV, ASML's growth myth will continue to maintain, and now the pullback of stock prices is just a small spray in the sea! In terms of valuation, ASML is trading at just 30 times earnings, lower than at its lowest point last October: This pullback may be a good opportunity for semiconductors to get on board!