Key Takeaways
- China has reportedly commenced mass production of homegrown immersion DUV lithography tools, a major milestone in its effort to bypass Western export restrictions.
- Strategy (MSTR) increased its USD Reserve by $525 million, bringing its total cash cushion to $3.75 billion to cover preferred dividends.
- The company's cash reserve now provides 2.1 years of dividend coverage, ensuring stability for its various preferred stock series.
- Strategy (MSTR) repurchased $25 million of its STRC preferred stock, marking the first buyback under its new Digital Credit Securities Repurchase Program.
- Global semiconductor equipment stocks, including ASML (ASML), faced immediate pressure following reports of China's domestic lithography progress.
China Breaks Through in Domestic Lithography
A Shanghai-based, state-backed company has successfully initiated the mass production of homegrown immersion Deep Ultraviolet (DUV) lithography machines. This development, first reported by The Information, represents a critical leap for Beijing as it seeks to build a self-sufficient semiconductor supply chain. By localizing the production of these complex tools, Chinese chipmakers aim to mitigate the impact of U.S. and Dutch export controls that have historically limited access to advanced equipment from ASML (ASML).
The news sent shockwaves through the semiconductor sector on Monday. Shares of ASML (ASML) and U.S. peers like Applied Materials (AMAT) and Lam Research (LRCX) saw early gains evaporate as investors weighed the long-term threat to their dominant market share in China. Analysts suggest that if domestic tools prove viable, the "teeth" of Western sanctions could be significantly weakened.
Strategy Bolsters Liquidity and Dividend Coverage
Strategy (MSTR) announced a significant strengthening of its balance sheet, raising its USD Reserve to $3.75 billion. The $525 million increase was primarily funded through the sale of approximately 5.4 million shares of MSTR common stock via its at-the-market (ATM) program between July 20 and July 26, 2026. This cash pile is specifically designated to support interest payments on debt and dividends for its preferred stock series, including STRC (STRC).
With this latest capital injection, the company now boasts 2.1 years of dividend coverage. This move appears to be a strategic pivot toward liquidity management, as the company reported no new Bitcoin purchases for the week ending July 26. Strategy's total Bitcoin holdings remain at 843,775 BTC, maintaining its position as the world's largest corporate holder of the digital asset.
First Buyback of STRC Preferred Stock
In addition to building its cash reserves, Strategy (MSTR) executed its first repurchase of Variable Rate Series A Perpetual Stretch Preferred Stock (STRC). The company bought back 288,930 shares for approximately $25 million at an average price of $86.52 per share. This action follows the launch of the Digital Credit Securities Repurchase Program, which still has $975 million in remaining capacity.
Management indicated that it intends to be a "regular and disciplined purchaser" of STRC as long as it trades below its $100 par value. The buyback is part of a broader effort to stabilize the trading price of its preferred securities and reduce volatility. Despite the pause in Bitcoin accumulation, the firm’s leadership continues to signal that long-term cryptocurrency exposure remains a core pillar of its corporate strategy.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.