thesis production process

How to structure your PhD thesis

Organising your PhD thesis in a logical order is one of the crucial stages of your writing process. Here is a list of the individual components to include

Shama Prasada Kabekkodu

• More on this topic

Created in partnership with

You may also like

Popular resources

.css-1txxx8u{overflow:hidden;max-height:81px;text-indent:0px;} The secrets to success as a provost

Using non verbal cues to build rapport with students, emotionally challenging research and researcher well-being, augmenting the doctoral thesis in preparation for a viva, how hard can it be testing ai detection tools.

The task of writing a PhD thesis is top of mind for many aspiring scholars. After all, completing one is no small task. And while these pieces of writing often share a standard format, this can differ slightly based on the requirements of your institution or subject. So what elements make up a PhD thesis?

A doctoral thesis usually contains:

• A title page
• Declarations from the candidate and supervisor
• A certificate from the candidate and supervisor
• A plagiarism report
• Acknowledgements 
• A table of contents
• Abbreviations 
• An abstract

Chapters typically cover:

• A general introduction 
• Literature review
• Analysis of the gap in research with aims and objectives
• Materials and methods
• Summary and conclusion
• References or bibliography. 

You should also include a list of papers you have published and any relevant achievements at the end. 

An explanation of each of the components of a PhD dissertation 

Title page: a PhD thesis starts with a title page that contains the complete title of the research work, the submitting university, names of the candidate and supervisor, affiliation and month and year of submission.

Abstract: this serves as a concise synopsis of the dissertation, covering the research context, purpose of the study or research questions, methodology, findings and conclusions. This section is usually one to two pages in length. 

Table of contents: this page lists the thesis content and respective page numbers.

General introduction and literature review: this component is usually 20 to 40 pages long. It presents the readers with the primary material and discusses relevant published data. It provides an overview of pertinent literature related to the thesis such as texts that critically assess the existing literature to identify the gap in research and explain the need behind the study. 

Aims and objectives: this section of the thesis is typically one to two pages long and describes the aims and objectives of the study. Structure them as three to four bullet points describing specific points that you will investigate. Approach this by thinking about what readers should understand by the end of the thesis. Ensure you:

• Give a clear explanation of the purpose and goals of your study 
• Outline each aim concisely
• Explain how you will measure your objectives
• Ensure there is a clear connection between each aim
• Use verbs such as investigate, evaluate, explore, analyse and demonstrate.

Materials and methods: this section briefly explains how you have conducted the study and should include all the materials you used and procedures you implemented. For example, if your research involves working with chemicals, list the chemicals and instruments used, along with their catalogue numbers and manufacturers’ names. This section should also explicitly explain the methodology you used, step-by-step. Use the past tense while writing this section and do not describe any results or findings of the study yet.

Results: this section is sometimes called the “findings report” or “the experimental findings” (referring to data collection and analysis). Write the results concisely and in the past tense. Include text, figure and table infographics created with tools such as Microsoft PowerPoint, Adobe Illustrator and BioRender to visualise your data . 

Discussion: this is a chance to discuss the results and compare the findings of your study with the initial hypothesis and existing knowledge. Focus on discussing interpretations, implications, limitations and recommendations here.

• Resources on academic writing for higher education staff 
• Tips for writing a PhD dissertation: FAQs answered
• How to tackle the PhD dissertation

Summary and conclusion: this section should be shorter than the discussion and summarise your key findings. The summary and conclusion should be brief and engaging, allowing the reader to easily understand the major findings of the research work. Provide clear answers to the research questions, generate new knowledge and clarify the need for the study. 

Future perspective: this section of the thesis (which is often combined with a summary or conclusion) talks about the study's limitations, if any, and indicates the directions for future studies based on your findings. 

References or bibliography: the last section should include the list of articles, websites and other resources cited in the thesis.

Always remember that, depending on the department, university or field of study, you might have to follow specific guidelines on how to organise your PhD thesis. Ensure you consult your supervisor or academic department if you have any doubts.

Shama Prasada Kabekkodu is a professor and head of cell and molecular biology at Manipal School of Life Sciences, Manipal Academy of Higher Education, India.

If you would like advice and insight from academics and university staff delivered direct to your inbox each week, sign up for the Campus newsletter .

The secrets to success as a provost

Emotions and learning: what role do emotions play in how and why students learn, the podcast: bringing an outsider’s eye to primary sources, a diy guide to starting your own journal, formative, summative or diagnostic assessment a guide, harnessing the power of data to drive student success.

Register for free

and unlock a host of features on the THE site

What is Pre-Production in Film — A Blueprint for Success

• Stages of Film Production
• Film Financing
• Film Production
• Pre-Production
• Post-Production
• Film Distribution
• Film Marketing

P re-Production can be overwhelming even for the seasoned producer. It requires knowledge of many facets of production, as well as an ability to prevent potential crises down the line. It’s not always easy but if you stay organized, it’s pretty simple. So what is Pre-Production in film? When does it start and when does it end? This post will answer those questions and will give a quick rundown.

Watch: Stages of Filmmaking — Pre-Production Explained

Subscribe for more filmmaking videos like this.

Stages of Production

The stages of film production.

The filmmaking process takes place in distinct phases: development, financing , pre-production, production and post-production . Once the film is complete, it enters stages dedicated to marketing, distribution , and exhibition.

So, what is pre production?

Pre-Production is an early stage of any project, including commercials, music videos, short films, and feature films. This crucial step defines how efficient, organized and, ultimately, how successful the production stage will be.

Let's define Pre-Production and then we'll get into more detail on the timelines and the necessary steps involved.

PRE-PRODUCTION DEFINITION

What is pre-production in film.

Pre-Production  is the planning process and execution of every task that must take place before production begins. It usually begins once the script is finished and involves the director, cinematographer, producers, first assistant director, production managers, production coordinators, and location scouts. Every project is different depending on the budget and the size of the production, but there are some relatively universal guidelines to consider.

Pre-Production Steps:

• Form a new company (not always applicable)
• Lock the shooting script
• Break down the script
• Hire key department heads
• Finalize the budget
• Storyboard and shot list the scenes
• Scout and secure locations
• Cast actors and hire crew
• Get permits and insurance
• Schedule shoot days
• Perform a tech scout
• Arrange for equipment rentals

Pre-Production TIMELINE

When does pre-production start.

Pre-Production immediately follows the "development stage," where the script is worked into a viable final draft. As soon as the screenplay is "locked," the process can begin in earnest. 

Below is a diagram of a basic Pre-Production workflow. Every project is different but this order of operations can apply to any type of production, including short films, music videos, commercials, or feature films.

Download  high-resolution chart here

There are dozens of tasks to complete during Pre-Production by various crew members . One of the key roles in the process is the 1st Assistant Director . Here's Anya Adams, 1st AD for Black-ish , walking us through a typical day on the set.

What responsibilities does a 1st AD have?

Laying the foundation, 1. form your company.

The development phase is over, and you’ve got the green-light! However, before you get to the ‘fun stuff’ like casting  and  location scouting , you need to lay the foundation for pre production.

Every production is like a business. Actually, in most cases, productions are  businesses: formally incorporated and filed with the state.

Before you can hire anyone or secure assets, the first major check in your film pre production checklist is establishing a business foundation.

So ask yourself: will the film be produced out of a pre-existing production company like J.J. Abrams' Bad Robot? Or will you form a separate corporate entity for it (often an LLC)?

In the pre production process you set up your production company

Whatever you decide, set this up first.

Every employee you hire, every contract you sign will be done through this business entity. Once you have a business entity, you can open a bank account, deposit the production funds, retain an attorney to oversee production legal, and hire your team.

Related Posts

• Ingredients Behind The Best Company Culture Videos →
• How to Copyright a Script and Protect Your Screenplay →
• Create a Production Company Business [FREE Template] →

Prelim Film Budget & Schedule

2. create a budget and schedule.

If you’re the only person on the project, you’re probably the film’s producer. Your next step in the pre production process is to bring a line producer aboard to prepare the film’s first real budget and  production schedule . 

StudioBinder's Video Production Calendars

If you’re in need of a clean template for creating of preliminary budget, read our companion article  Managing Your Film Budget Cashflow & PO Log .

On smaller productions, where the workload is lighter, you might choose to hire a combination Line Producer/Production Manager at this point.

If you already have a director on the project, that’s great!

It’ll only help the line producer create a more accurate preliminary production budget and production schedule. 

Once this is done, you’ll know what you can afford, and will be free to move forward with additional hiring.

CREATE A PRELIMINARY PRODUCTION SCHEDULE

Once you lock your shooting script, and format correctly for scheduling software, it's time to set the schedule.

Since a shooting schedule is the bedrock of production planning, carefully assess how many scenes you can shoot per day. Since one page is equal to one minute of screen time, most productions try to shoot five pages day.

In scheduling software, like StudioBinder, your scenes are broken into page length to give you an idea of how much you're loading onto your cast and crew.

You can then drag the strips around and add day breaks.

Everything will automatically load into a schedule and call sheets.

StudioBinder Shooting Schedule

• The Bechdel Test: Script Breakdown for Film Diversity →
• Complete Guide to Mastering Script Breakdown Elements →
• How to Break Down a Script (FREE Script Breakdown Sheet) →

BALANCE CREATIVE VS BUDGET

3. script breakdown.

With all of this new information, the line producer or production manager can revise the budget and schedule. This is a particularly tricky phase of the film/video production process, because department heads and the director might have bigger ambitions than the film can sustain. 

It’s the entire team’s responsibility at to help the line producer / UPM find the balance between creative, budgetary and logistical decisions.

When fine-tuning your shooting schedule, make sure to factor in the psychology and emotion of your talent and crew into consideration.

A happy cast & crew is a more productive cast & crew. Read  Pro Tips to Create a Better Production Schedule to keep momentum on set.

BUDGET YOUR BREAKDOWN

Once you've carefully sorted your script's elements into categories, it's time to assign a dollar amount to each.

A single stunt could run you into the millions, while an extra could only cost a hundred or so a day. Correctly estimating the cost of each element will give you as close a prelim budget as possible.

Our guide on  How to Effectively Budget a Script Breakdown delivers a producer's insight on how much to estimate for each element.

CREATE SCRIPT BREAKDOWN SHEETS

Next, carefully comb through each page of your script and mark production elements (cast members, props, extras, stunts, etc.).

Your finalized list of all these items will make up your  breakdown sheet . By tagging production elements within software, you can generate your final list.

Check out what a finished script breakdown looks like below:

StudioBinder Script Breakdown

But what's the difference between a prop and set dressing? For the answer, download our FREE Ebook: A Filmmaker's Guide to Script Breakdowns .

Free downloadable bonus

Free download , a filmmaker's guide to script breakdowns.

You can't start shooting without a proper and thorough script breakdown.  Download our FREE e-book to learn the in's and out's of breaking a script, categorizing elements, and generating reports. Then everything from the budget to the schedule will fall into place.

Department Keys

4. hire key production heads.

There are many people who will work on your film by the time it’s finished, but you only need a few of them at the very beginning of the pre production planning phase.

With a preliminary production budget in place, you can confidently hire more people to your team. At this point, you’ll bring aboard your director (if you haven’t already), your department heads (like your cinematographer, production designer, editor, costume designer, casting director, etc.) and, on larger projects, your production coordinator and possibly your production accountant.

Afterwards, you’ll be ready to start delegating.

Make sure your line producer or production manager is signatory to the bank account, and empower your director to begin making creative decisions with the department heads.

Tip: KEEP CONTACTS Readily Accessible

Before you know it, your production will grow from a team of few to a team of hundreds. Because of that, it's important to keep all of your contacts in a place that you can easily reach all of them at a moments notice.

Excel sheets, or software, like StudioBinder, will not only store your contacts, it will auto-populate them onto call sheets.

RENTALS, PROPS, LOCATIONS AND PERMITS

5. locations and scouting.

With the production budget and production schedule revised to everyone’s satisfaction, the next phase of the filmmaking pre production process is to get out there and secure the things you need for your film.

Check out this video below on location scouts and tech scouts:

StudioBinder Tech Scout

Department heads and your line producer / production manager get bids on equipment, book rentals, price out props and building supplies, etc.

This is also when your location manager scouts shooting locations, and with the team’s approval, books the best options.

Creative PLanning

6. storyboards and shot lists.

With department heads in place, the director spends some time doing the creative planning.

All departments, at this point, are focused on identifying what they will need in order to accomplish the director’s vision.

They meet regularly and communicate their needs to the line producer so that the budget can be revised.

Important questions will be asked and the highest risks will be identified. Will the cinematographer need special equipment for a specific shot? Will the production designer need more time to design and build a complicated set? Now’s the time for the line producer and/or production manager to find out!

CREATE A STORYBOARD

As you brainstorm your shot list, it's not uncommon to create a detailed storyboard at the same time.

Looping in your director, DP, and team of creatives, block out your scenes into pictures.  That way you can and your film producer can watch the movie ahead of time, saving you time and money to make alterations later on. 

StudioBinder allows you to create a slideshow link that you can easily send out to clients or use for pitch meetings. Each frame is labeled by your shot list specs.

StudioBinder Shot List - Spectre

Create a shot list.

Are you going to shoot a scene from a drone? Do a Birdman-esque one-take? 

Your shooting schedule isn't complete until you determine how you will shoot each scene. As you generate your shot list, you tack on more elements (denoted "special equipment") you'll need for the production.

How to Build a Shot List

Whether you're using software or going by hand, make sure to group your shots (by color like I did below) so that when you get to shoot you can easily communicate what setups are needed and how you'll get all of your shots.

• Shot Listing Like a Pro: When Do You Create a Shot List? →
• Shot List Fight Scenes Like Guy Ritchie: Sherlock Holmes →
• Make a Shot List Using StudioBinder’s Shot List Software →

Pro Tip: Book Locations Early

Don’t forget to secure your location permits early in the pre production process! Some municipalities can take a few weeks to process permit applications.

This is a good time to work on product placement deals, and to secure insurance, too. Use a location scout release form to make sure you get all the signatures.

CREATIVE PLANNING

7. production design.

Whether your shoot requires mostly working on sound stages or location shooting, production design covers it all. The Production Designer is the head of the Art Department. Along with the Cinematographer, they are in charge of creating and capturing the visuals in a film. In other words, these are important jobs during pre-production.

Production Design 101

Crew & casting, 8. casting and rehearsals.

While all this is going on, your team will grow.

Departments will fill their ranks with additional crew, and the casting director will bring in auditions. Now’s when you sign union agreements and contracts so you can employ union members on your production. Your production coordinator will be kept busy sorting through the paperwork load, so don’t forget to be extra-nice!

By the end of this stage, you should be have secured your cast, crew, production staff, key locations, and the tools to produce the movie (or, at least, everything will be booked and on the calendar).

Make sure you use  casting sheet templates at your casting call , so you don't lose any information going forward.

• How to Find a Film Crew for your Short Film →
• Best Casting Tips for Directors and Producers →
• Complete Guide to Actor Release Forms (FREE Template) →

SENDING OUT YOUR CALL SHEETS

The last step of pre production is sending out call sheets.

Your call sheet lets your talent and crew know when they should be on-set, and what's the schedule for the day.

In many ways, your call sheet is the capstone of pre production--it uses all the information you've collected throughout this entire process.

To prep your call sheet, use our free template  here .

Download FREE Pre-Production Checklist PDF

This article took 30 hours to write. Thirty! Needless to say, there was a LOT we couldn’t include in the post.  Download our FREE, printable checklist PDF to get access to Pre-Production Tips (includes bonus content not in the post).

Testing Testing 123

9. camera prep and equipment.

During pre-production, the cinematographer has the opportunity to decide the overall look of the imagery. They might want to shoot with low key lighting or find camera lenses that will best suit the material.

Ultimate Guide to Camera Lenses  •   Subscribe on YouTube

10. permits and insurance.

Unless you're running around shooting guerrilla style, you're going to need film permits to shoot in a location and insurance to cover yourself in case of any number of problem scenarios.

How to Get a Film Permit (And Why You Should)

As you can see, there is a lot of work that goes into Pre-Production. Look at it this way, the more work you put into this stage will help ensure that your production goes as smoothly as possible. Problem solving ahead of time is acceptable — waiting until you're on set is not.

That's why production management software becomes an invaluable tool. Keeping everything centralized and organized in  StudioBinder Production Management Software is the key to a successful shoot. 

StudioBinder production software  •   Subscribe on YouTube

Production phase begins, when does pre-production end.

Completing this stage means the cameras are ready to roll. You've cast your actors ; permits for locations have been secured; you've hired the crew and arranged for equipment rentals .

Pre-Production is an essential stage of any project and it will help the actual production go as smoothly as possible. For a more detailed explanation of the steps involved, our next article covers those topics and includes a free Pre-Production checklist.

• Make a Short Film: Pre-Pro Workflow →
• Produce a Movie: The Pre-Pro Process Explained →
• FREE Download: Ultimate Pre-Production Checklist →

Pre-Production checklist

Now that you’ve laid the foundation, let’s get into each steps in detail. The next post describes the various steps in the pre-pro stage, including locking the script, storyboarding, obtaining permits and insurance, and hiring the crew. You'll also find a FREE pre-pro checklist to make sure your next project stays organized and productive.

Up Next: The Ultimate Pre-Pro Checklist →

Project management for video creatives. tasks, file sharing, calendars and more..

Manage video production timelines, tasks, storyboards, shot lists, breakdowns, call sheets. Made for video creatives, new media and film.

Learn More ➜

It's helping me know what pre-production means and also it's very useful to me cuz it's helping me very much in my school on my studies

Thank you so much coz I always enjoy your teachings and day by day I improve keep with that heart God bless you

Thankyou so much binder studio. Your all topics are very useful for me. I also learned the story circle from your side and it was very useful for me. Thanks again lot of love and blessings.💐💐😊😊

Hello studiobinder Am jimmy , is there anyway you can help by supporting me as a young and new filmmaker to shot my first movie i have waited years to shot?

Very useful and practical points…

Leave a comment

Your email address will not be published. Required fields are marked *

• Pricing & Plans
• Product Updates
• Featured On
• StudioBinder Partners
• The Ultimate Guide to Call Sheets (with FREE Call Sheet Template)
• How to Break Down a Script (with FREE Script Breakdown Sheet)
• The Only Shot List Template You Need — with Free Download
• Managing Your Film Budget Cashflow & PO Log (Free Template)
• A Better Film Crew List Template Booking Sheet
• Best Storyboard Softwares (with free Storyboard Templates)
• Movie Magic Scheduling
• Gorilla Software
• Storyboard That

A visual medium requires visual methods. Master the art of visual storytelling with our FREE video series on directing and filmmaking techniques.

We’re in a golden age of TV writing and development. More and more people are flocking to the small screen to find daily entertainment. So how can you break put from the pack and get your idea onto the small screen? We’re here to help.

• Making It: From Pre-Production to Screen
• What is Verbal Irony? Definition and Examples
• How to Create Script Sides for Film & TV [with Examples]
• 3 Types of Irony Every Storyteller Should Know (with Examples)
• What is a Call Sheet — Everything You Need to Know
• 229 Facebook
• 6 Pinterest
• 17 LinkedIn

ASML: TSMC Order Creates Strong Upside

• ASML possesses near-exclusive production of advanced EUV lithography systems, positioning them at the core of the global semiconductor manufacturing process.
• The company's EUV lithography machines are crucial for developing next-generation semiconductor devices, meeting the surging demand for high-performance computing and AI applications.
• ASML's performance creates strong investment appeal, with robust revenue driven by high demand across major semiconductor markets and the expectation of more firms requiring sophisticated semiconductor solutions.

Pixelbizz/iStock Editorial via Getty Images

Investment Thesis

Dutch semiconductor giant ASML ( NASDAQ: ASML ) possesses near-exclusive production of advanced extreme ultraviolet (EUV) lithography systems. This technology is needed in the development of next-generation semiconductor devices as the industry increases its demand for AI chips.​ The company's dominant position in this niche is described as a quasi-monopoly by industry analysts, which places the tech firm at the core of the global semiconductor manufacturing process​​.

ASML's EUV lithography machines will continue to position the company as a leader in the industry since no other firm possesses the technology that can produce chips as small as three nanometers to meet the surging demands of high-performance computing and AI applications​​​​.

With this, I think the company’s performance is gaining more investment appeal, especially given new orders from TSMC which I do not think are priced into the stock at this point. ASML has consistently demonstrated robust revenue driven by the high demand across major semiconductor markets, including those driven by firms like TSMC ( TSM ), Samsung, Intel ( INTC ), and others that rely on ASML’s technology for chip production​​. With AI and high-performance computing evolving at an unprecedented rate, we should expect more firms to require more sophisticated semiconductor solutions​​. With new TSMC orders likely coming in this year, I think we could see some of this future demand being pulled forward.

While some have been concerned about the United States’ restrictions on exporting critical semiconductor technology to China, where ASML holds a major market presence at around 49% of system sales in Q1 2024, management noted the restrictions did not create a large negative impact, contrary to expectations.

Given this, I believe that ASML is a strong buy. The company is poised to grow further in the semiconductor supply chain with the upcoming demand surge for advanced AI chips and the manufacturing machines that make them, starting with TSMC being the first catalyst.

ASML is taking advantage of the artificial intelligence (AI) revolution through their advanced AI chip manufacturing solutions. The company’s extreme ultraviolet (EUV) lithography systems are crucial for developing next-generation semiconductor devices, and puts them in a position of near-monopoly in this high-tech niche.

Their latest High-NA EUV system, a 165-ton machine that costs $380-million, is capable of etching features as small as eight nanometers on chips. Analysts believe that this will revolutionize the industry by bringing in denser and more efficient chips that can further boost computational power and efficiency​​.

I believe that ASML’s technology cannot be overstated, especially with the geopolitical tensions it has stirred before. In 2019, the United States imposed restrictions on the export of these advanced systems to China citing concerns over national security and the technological advantage that such equipment could confer to the Asian nation, which has been rapidly advancing their own semiconductor capabilities​​.

It’s evident that the development of AI chips requires more advanced levels of computational power and efficiency, and the demand for ASML’s machines can fill this gap. This has set off what many industry analysts believe as the start of a massive upgrade cycle across the semiconductor industry that is fueled by the needs of AI technology​​.

In response to the export restrictions, ASML has seen varied reactions from the global market. While the company acknowledges the geopolitical complexities, they continue to assure the market that they are in compliance with international laws while pursuing commercial objectives. The ongoing demand from major tech firms for ASML's EUV systems emphasize the value these machines play in current manufacturing processes and in the future developments of the semiconductor industry​​​​.

The biggest reason I chose to dive into ASML is their new contract with TSMC according to Bloomberg. This new contract by the worlds largest semiconductor manufacturer solidifies the strong need for their new EUV systems and show how the strong demand for AI chips by companies like Nvidia ( NVDA ) and AMD ( AMD ) are now starting to translate to increased demand upstream at the semi fabs.

Guidance Commentary From Management

Recent reports reveal that ASML will ship their high-NA EUV machines to Taiwan Semiconductor Manufacturing ( TSM ) within the next year. Despite initial reservations about the cost, TSMC's acquisition of these machines will allow them to produce more advanced chips necessary for AI applications that require high computational power.

ASML's advanced systems is a barometer for the semiconductor industry's trajectory. Analyst’s projections indicate that the semiconductor sector, driven by AI and machine learning, is on a rapid growth phase. This expected surge in demand continues to push companies like TSMC to expedite their technology updates and initiate a cycle of accelerated technology adoption by demanding more from their suppliers such as ASML.

ASML Executive Vice President Christophe Fouquet said during the company’s Q1 earnings call :

Our outlook for the full-year is unchanged with similar revenue, compared to 2023. In line with the industry continued recovery from the downturn, we expect a stronger second-half relative to the first-half of the year. We view 2024 as a transition year and continue to make investment this year both in capacity ramp and in technology, to be ready for the upturn in the cycle. Looking longer term, while there are still significant uncertainties, primarily driven by the macro-environment, it appears we are passing through the bottom of this specific cycle and we expect an industry recovery over the course of 2024. Based on the discussion with our customers and supporting our strong backlog, we expect 2025 to be a strong year driven by a number of factors as mentioned last quarter.

For the second quarter, management expects revenue to come in somewhere between "EUR5.7 billion and EUR6.2 billion" with Gross Margin expected to be "between 50% and 51%" ( Q1 Call ). While management did not provide a specific estimate for their EPS for Q2 on the last call, I am optimistic that as we see these orders from TSMC come in (especially in the second half of the year) we can see the company beat on both top and bottom line estimates from analysts.

For this operating year (ending December 2024) analysts are expecting the company to earn $20.60/share, a decline of 4.81% year over year, and revenue coming in at $30.14 billion, up only 0.51% year over year.

Keep in mind that these estimates for revenue have been relatively flat over the last 6 months (down 0.75%) despite clear new demand opportunities from the likes of TSMC.

And while the company currently receives 49% of their revenue from system sales from China, management noted recent restrictions (as I have mentioned before) do not seem to have made an impact.

In essence, compared to estimates, there is more not-priced-in variance to the upside than the downside for 2024.

ASML's valuation is (on paper) a significant premium compared to their sector. With a forward P/E of 49.91 compared to the sector median of 23.68, ASML's valuation is more than double that of their peers at a 110% difference. I believe this premium is justified by ASML's growth prospects, particularly with the growth of AI and advanced semiconductor manufacturing, through the company’s superior lithography systems​​.

However with this, estimated revenue growth of 19.57% year over year (FWD) for the next 12 months (compared to little revenue growth in the 2024 operating year) beats the sector median of 6.58% by 197.61%. If we were to see the company’s forward P/E exhibit this same level of premium compared to the sector median (197.61%), this would mean that the company’s stock could have roughly another 79% upside.

I got the 79% upside by assuming that ASML attains a 197.61% premium over sector median forward P/E ratios (compared to 110% premium right now).

Why I Don’t Think This Is Priced In

Despite the optimism surrounding potential sales, particularly the anticipated purchase of systems by TSMC each valued at $380 million, recent adjustments in revenue and EPS forecasts have been relatively modest (as I mentioned before estimates have been largely flat). Over the past six months, I believe that despite substantial bookings, there has not been a significant upward revision in earnings forecasts. The number of down revisions in revenue forecasts slightly surpasses the up revisions, suggesting a cautious outlook among analysts about near-term revenue acceleration​​.

In essence, with the conservative revenue growth forecasts (19.57%) the shares are undervalued especially given that demand is going to get pulled forward it appears. With more aggressive growth forecasts likely reasonable at this point due to TSMC deals the company could have even stronger upside.

As I mentioned before, ASML is at the center of international trade restrictions due to security concerns and the strategic technological competition with China. The Dutch government recently revoked export licenses for some of ASML's systems (NXT:2050i and NXT:2100i), which would affect a segment of their customer base in China . This is part of broader U.S. policies initiated under the Trump administration and expanded under President Biden, to curb China's access to technologies essential for manufacturing advanced semiconductors. Not to be outdone, China is also reportedly already progressing on its efforts to stop depending on ASML.

Another risk is the company’s highly concentrated customer base, which highlights their vulnerability to sector-specific risks, particularly geopolitical tensions that could impact TSMC. The sheer cost of ASML’s EUV machines limits the pool of potential customers. High costs have already driven players like GlobalFoundries out of the advanced chip manufacturing market. TSMC, Samsung and Intel constitute nearly 84% of ASML’s business. Given the ongoing concerns over Taiwan’s geopolitical stability, the potential impact on TSMC could reverberate through ASML's operations and financial performance. A drop in new equipment orders, whether due to regulatory challenges, economic sanctions, or military conflicts, could drastically affect ASML’s business, in my opinion.

The company is also facing a significant order backlog of €39 billion. While this provides a cushion against immediate market fluctuations and ensures steady revenue streams, it risks the company’s operational scaling and responsiveness to market changes. With lead times averaging around two years, ASML is somewhat locked into their production schedules that limit their ability to rapidly adjust to shifts in semiconductor demand or technological advancements. This could leave ASML lagging if sudden shifts in technology or geopolitical issues arise. However, I am personally not concerned as much about a TSM geopolitical risk (see my article on this from last month).

But the company is confident about it. During the Q1 earnings call, CFO Roger Dassen, clarified:

“..we're not disclosing that. We're not disclosing the composition of the backlog in a geographic sense. So we said before at some point that the China -- we said at once that China was a little bit over 20% in the backlog and that as a result of that, no one should be surprised that the sales is around that percentage. That's not dramatically changed. So I think we're still in that ballpark, but we're not going to be very specific on that. But at least that gives you a bit of a ballpark.

ASML's recent financial results, with Q1 2024 bookings dropping significantly from €9.19 billion in the previous quarter to €3.6 billion, also highlights a substantial decrease in demand for the company’s most advanced machines. But this is part of the volatile business they are in. Order books vary significantly from quarter to quarter.

Bottom Line

I believe it’s clear that ASML’s exclusive production capabilities in EUV lithography systems proves their near-monopoly status on the manufacture of chips as small as three nanometers. Given the surging demand for high-performance computing and AI applications, the company has become indispensable in the industry as semiconductor firms such as TSMC, Samsung, and Intel, continue to rely heavily on ASML’s technology for their chip production.

However, ASML’s market position and the critical nature of their technology also present unique challenges and risks of course. The United States’ restrictions on exporting critical semiconductor technology to China, where ASML holds a significant market presence, underpin the geopolitical tensions they have to navigate. Even with these challenges, ASML’s business has not seen a negative impact so far.

Given this, I believe ASML represents a compelling buy for investors. The firm is well-positioned for future growth, driven by the ongoing demand for advanced chips and the value of their EUV systems in the semiconductor industry’s future. While there are significant risks related to geopolitical tensions and the need to manage a concentrated customer base, ASML’s strong backlog, technological leadership, and other operational measures to secure and expand their market position mitigate these concerns.

This article was written by

Analyst’s Disclosure: I/we have a beneficial long position in the shares of INTC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Noah Cox (account author) is the managing partner of Noah’s Arc Capital Management. His views in this article are not necessarily reflective of the firms. Nothing contained in this note is intended as investment advice. It is solely for informational purposes. Invest at your own risk.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About asml stock.

More on ASML

Related stocks.

Trending Analysis

Trending news.