Executive Summary

ASML Holding NV (ASML) is the most critical company in the global technology supply chain. It holds a de facto monopoly on Extreme Ultraviolet (EUV) lithography machines—the tools required to print the world's most advanced chips (7nm and below). Without ASML, Moore's Law stops. We view ASML not as a hardware manufacturer, but as a toll booth on the future of humanity.

1. The EUV Monopoly

Lithography is the bottleneck of chip manufacturing.

• 100% Market Share: ASML is the only company in the world that can build EUV machines. Canon and Nikon gave up years ago.
• Physics Moat: An EUV machine generates light by blasting microscopic droplets of tin with a high-power laser 50,000 times per second. This engineering feat took 20 years and billions of Euros to master. It is effectively impossible to replicate.
• High-NA Era: The next generation "High-NA" instruments ($350M+ per unit) are already being deployed to Intel and TSMC, extending the roadmap to 2nm and beyond.

2. Financial Quality

ASML combines the margins of software with the lock-in of utilities.

• Pricing Power: Because there is no alternative, ASML can pass on inflationary costs to customers (TSMC, Samsung, Intel) without losing volume.
• Service Revenue: The installed base of lithography systems generates recurring maintenance and upgrade revenue, providing a cushion against cyclical CapEx downturns.

3. Geopolitical Risk & Opportunity

ASML is caught in the crossfire of the US-China chip war.

• China Restrictions: The US, Dutch, and Japanese governments have restricted ASML from selling its most advanced EUV (and even some DUV) tools to China.
• Reshoring Boom: However, the global push for "Digital Sovereignty" (US CHIPS Act, EU Chips Act) is creating artificial demand. Every major region wants its own fabs, and every fab needs ASML machines. Duplication of supply chains = Multiplication of ASML orders.

Risks to the Thesis

1. China Retaliation: China accounts for a significant portion of revenue (legacy DUV tools). Further restrictions could hurt.
2. Cyclicality: The memory market (Samsung/SK Hynix) is volatile. A recession leads to CapEx cuts.
3. Technological Shift: If a new manufacturing technique (e.g., Nanoimprint Lithography) bypasses optical lithography, ASML's moat could erode (very low probability in the next decade).

Conclusion

ASML is a "Sleep well at night" stock. It is the definition of a wide-moat compounder. As long as the world needs faster computers, the world needs ASML.