ASML is the most important company you've never heard of.
The $300B+ Dutch firm makes the machines that make semiconductors. Each one costs $150m and access to them are a huge geopolitical flashpoint.
Here's a breakdown 🧵
1/ What *exactly* does ASML sell?
Its key product is an extreme ultraviolet lithography (EUV) machine, which uses advanced light technology to "print" tiny circuits onto Silicon wafers.
Only ~50 are made a year and ASML has a near monopoly on the machine technology.
2/ You def know ASML's main clients: Intel, Samsung and Taiwan Semiconductor Manufacturing Co. (TSMC).
They need EUV to keep Moore's Law ("# of transistors on microchips doubles every 2 years") alive and continue to advance computing.
Total ASML sales in 2020 = $16B+.
3/ The ASML story begins in 1984, as a joint venture between Dutch conglomerate Philips and an electronics maker called Advanced Semiconductor Materials Int.
The project had a very humble start: it was launched in a shed behind a Philip's building in Eindhoven, Netherlands.
4/ The venture's first product was called the PA 2000 stepper (think a slide projector "projecting" designs on silicon).
For years, the product failed to make headway against leading Japanese competitors (Nikon, Canon) and, in 1990, ASML was spun out as its own company.
5/ ASML scored its 1st hit product in 1991, giving it momentum to IPO in 1995.
Soon after, it acquired a # of US lithography firms and -- by the end of 1990s -- it had comparable market share to Nikon and Canon.
From there, ASML made 2 big bets that separated it from the pack.
6/ Both bets were made to keep up with Moore's law.
First: In 2006, ASML released its TWINSCAN system using immersion lithography (it utilizes water as lens to shrink the laser's wavelength = more circuits on chip).
It was ASML's first market-leading product.
7/ Also in the mid-2000s, ASML started spending huge R&D on EUV technology.
It was a massive risk, though: EUV lithography would require Samsung, Intel and TMSC to completely rebuild and redesign their fabrication plants.
From 2008-14, ASML put $5B+ into EUV research.
8/ The science behind EUV was established in the late 1980s. It was a US-led effort between the Dept. of Energy and industry (e.g. AMD, IBM, Intel).
ASML licensed EUV tech in 1999. Canon elected not to pursue it due to financial problems while Nikon chose to develop older tech.
9/ How EUV works today:
◻️ A tin droplet drops into a vacuum
◻️ It's pulsed by a high-power laser
◻️ Tin atoms are ionized, creating plasma
◻️ A mirror captures EUV radiation emitted by plasma
◻️ Mirror transfers EUV to wafer (wavelength=13.5 nanometers, basically X-ray level)
10/ The potential of EUV was so great that Intel, Samsung and TMSC -- all competitors -- jointly acquired 23% of ASML.
Intel put up the most: €2.5B for a 15% share (today, the firms have sold down most their stakes).
The first production-ready EUV machine was released in 2016.
11/ Why are EUVs so expensive?
ASML plays a role similar to Boeing for airplanes (also $100m+ products): it's an integrator of 4750 global high-value parts suppliers:
12/ Why can ASML only produce 50 EUV machines a year?
◻️ Co-ordinating 1000s of suppliers is very difficult (just like an aircraft)
◻️ Each machine is custom (30+ variables to choose from)
◻️ Lead-time are long (speciality parts like the Zeiss lens takes 40 weeks to produce)
13/ The delivery process is nuts, too:
◻️ Each EUV weighs 180 tons
◻️ A disassembled EUV takes up 40 shipping containers
◻️ Shipping it (mostly to Asia) takes 20 trucks and 3 Boeing 747s
◻️ ASML teams must be on-the-ground to maintain them
◻️ The min spend to house EUVs is $1B
14/ Today, ASML has a 90% share in semi lithography (EUV and Deep UV).
EUV tailwinds are huge:
◻️ Semi CAPEX >$120B+ in 2021 (similar spend in following years)
◻️ Key sectors (esp. auto AKA Tesla chips) will see growth for years
◻️ Transition to 5nm process requires more EUV
15/ Even if machine sales slow, ASML's business is increasingly shifting to system maintenance, relocation and upgrades.
Over a 20yr lifespan of an ASML machine, services-based sales may reach 50% of the initial machine price (w/ high margins)...across a growing installed base.
16/ With chips needed in everything (data centres, AI, autos, mining), semis are the OIL of the 21st century.
The US has even blocked Dutch exports of EUV-licensed tech to China. As the Tech Cold War heats up, expect to hear more of ASML: the $300B+ giant that started in a shed.
17/ If you enjoyed that, I write threads breaking down tech and business 1-2x a week.
Def follow @TrungTPhan to catch them in your feed.
Here's a related one that might tickle your fancy:
One of the Team USA rowers who won a Gold Medal is an investment banker and actually did the “B2B SaaS Sales” joke on Linkedin. Legend.
Here’s the rest of the post (perfectly formatted to show up in the feed as a shitpost): linkedin.com/feed/update/ur…
Justin if you’re reading this and are available for consulting, the research app team would love to engage your B2B SaaS knowledge for our Q4 sales roadmapBearly.AI
The amount of work Hayao Miyazaki and Studio Ghibli team put into a film is mind-boggling.
Each typically has 60k-70k frames, all hand-drawn and painted with water color.
This 4-second clip (“The Wind Rises”) took one animator 15 months to do. Insane.
The docu “10 Years with Hayao Miyazaki” shows him talking to the animator (Eiji Yamamori) after its done.
It’s so good:
Miyazaki: “Good job.”
Yamamori: “It’s so short, though”
Miyazaki: “But it was worth it.”
The animator gets a second of joy (he’s pumped) but on to the next.
Miyazaki doesn’t use digital FX or computer graphics. He believes “that the tool of an animator is the pencil.”
On a related note, here’s something I wrote about another Japanese legend dedicated to the craft (Ichiro Suzuki) and the art of mastery: readtrung.com/p/jerry-seinfe…
New York City paid Mckinsey $4m to conduct a feasibility study on whether trash bins are better than leaving garbage on the street.
The deck is 95-slides long and titled “The Future of Trash”.
Some highlights:
▫️The official term is “containerization”, which is the “storage of waste in sealed, rodent-proof receptacles rather than in plastic bags placed directly on the curb.”
▫️Two main types of containerization: 1) individual bins for low density locales; 2) shared containers for high-density.
▫️NYC needs to clean up 24,000,000lbs of garbage a day
▫️Containerization has only become the norm worldwide in major cities in the past 15 years.
▫️New York City first considered containerization in the 1970s but never conducted a feasibility study until now (Mckinsey’s sales team has been dropping the ball)
▫️Key considerations for container viability:
• POPULATION DENSITY: NYC has 30k residents per square mile (more dense than comparable big cities)
• BUILT ENVIRONMENT: Few places to “hide” containers due to history of infrastructure development.
• WEATHER: Snow creates challenges for “mechanized collection” in the winter.
• CURB SPACE: Mostly taken up by bus stops, bike lanes, outdoor dining and fire hydrants.
• COLLECTION FREQUENCY: NYC needs to double frequency of pick-up for estimated speed of trash that bins would accumulate.
• FLEET: A new garbage truck will needs to be designed to collect rolling bins at scale.
▫️ The proposed solution (literally garbage bins and shared containers) covers 89% of NYC streets and 77% of residential tonnage.
▫️The three case studies — because you gotta have solid case studies — are Amsterdam, Paris and Barcelona.
▫️There is a slide called “Why containerization matters” and three reasons are “rats”, “pedestrian obstruction” and “dirty streets” (the 21-year intern that did this slide billed at prob $10k an hour is my hero).
The study is actually pretty interesting.
I have no idea if $4m is a rip-off to learn that “yeah, we should put garbage in bins so rats don’t eat it” but I would have happily done it for 10-20% of that budget (and come to a similar conclusion).
It is actually an interesting deck. Just the thought of a 20-year old newly grad getting billed at an obscene rate to say”rats get to garbage” is kinda funny
Four more solid slides:
— By the numbers (daily garbage = 140 Statue of Liberty a day!!)
— City comparison
— Container comparison (looks like they did select the “scalable” trash bin)
— Curb side analysis
Think Mckinsey telling NY to “put garbage in bins so rats don’t eat it and people can walk” will work out better than when it told AT&T in 1981 that cellphones would be “niche.”
The Economist latest cover story on solar energy is packed with interesting stats.
▫️Solar energy will be the primary source of human energy use by 2040
▫️$500B spent on buying and installing solar panels in 2024 (nearly same “sum being put into upstream oil and gas”)
▫️Solar on track to produce “more electricity than all the world’s nuclear power plants in 2026, than its wind turbines in 2027, than its dams in 2028, its gas-fired power plants in 2030 and its coal-fired ones in 2032”
▫️Since the 1960s…the levelised cost of solar energy—the break-even price a project needs to get paid in order to recoup its financing for a fixed rate of return—has dropped by a factor of more than 1,000
▫️From the mid-1970s to the early 2020s cumulative shipments of photovoltaics increased by a factor of a million, which is 20 doublings.
▫️Over the same span, the “prices dropped by a factor of 500. That is a 27% decrease in costs for each doubling of installed capacity, which means a halving of costs every time installed capacity increases by 360%.”
▫️The cost of a kilowatt-hour of battery storage has fallen by 99% over the past 30 years.
The chart below — which they made vertical (kind of weird) — shows global useful energy consumption over the past century.
I’ll add two more posts after this one with excerpts on obstacles and opportunities.
— A lot of A/C for Sub-Saharan African (need 2TW of new solar just for Africa to reach India level of electricity use)
— Filter air continuously (reduce spread of airborne diseases)
— Carbon removal
— Water desalination
— AI/Data energy needs
Details from Red Lobster’s bankruptcy filing are wild and so much mismanagement:
▫️$1B in debt, $30m in cash
▫️Previous PE owner sold land and leased it back to Red Lobster at “above market rates”
▫️$20 Endless Shrimp cost it $11m but the interesting part is that one of the chain’s owners is Thai seafood firm Thai Union (which also owns Chicken By The Sea) and it may have used Endless shrimp to dump its own shrimp supply through the 578 restaurants in North America
▫️Thai Union became the only Red Lobster shrimp vendor, overcharging for shrimp and skipping quality reviews (Thai Union has written off its $500m+ investment)
▫️Red Lobster has had 5 CEO in the last 5 years (!!!)
▫️Sales down 30% since 2019
Red Lobster needed Yukitaka Yamaguchi — aka Japan’s Tuna King (sleeps 3 hours a day and knows where any fish is from on a single bite) — to run quality control.
Also, never forget Beyoncé name dropped Red Lobster with some R-rated verses in 2016 (“Formation”) and Red Lobster social responded and there was actually a brief sales surge.