The article compares Arm Holdings and ASML as semiconductor investment options. Arm licenses chip designs with a high-margin business model (93.88% gross margin, P/E 297.15), while ASML manufactures essential lithography equipment with a monopoly position (52.73% gross margin, P/E 56.35). The author recommends ASML due to its irreplaceable role as the sole provider of extreme ultraviolet lithography machines critical to advanced chip production, despite Arm's consistent growth in mobile and data center segments.
Axe note: Between Arm’s high-margin chip designs and ASML’s monopoly in lithography, South African investors might find more clarity betting on ASML.