Is ASML the Most Important Tech Company in the World?

Today, almost all electronic devices are powered by silicon-based chips. From the device on which you are reading this article to the car you own, everything is powered by chips. These chips power the data centres and also many military technologies. While Intel, Samsung or TSMC are well-known names in the semiconductor space, ASML Holdings is probably the most important and much less known of them all. ASML is the only company in the world that makes these highly sophisticated machines used in chip making.

Based in the Netherlands, Advanced Semiconductor Materials Lithography (ASML) has often been dubbed the most important technology company of our time. To put things in perspective, without ASML, there are no chips, and without chips, there is no progress.

Chris Miller, author of the book Chip War: The Fight for the World’s Most Critical Technology, claims that microchips are the new oil. While World War II was decided by steel and aluminium, chips will decide the next phase of human history. 

ASML, which started as a subsidiary of Philips, sells its machines to Intel, TSMC and Samsung. Founded in 1984, ASML’s profit has soared in the last couple of years, with the company valued higher than Intel. So what led to the rise of ASML?

EUV Lithography system (Source: ASML)

EUV Lithography—ASML’s Goliath 

ASML has a monopoly on the fabrication of Extreme Ultraviolet (EUV) lithography machines because each one of them is among the most complicated devices ever made, according to Miller. 

EUV lithography is a new state-of-the-art technology developed by ASML. Its closest competitors, Nikon and Canon, are not working on this technology, and experts believe that it could take them decades to crack EUV lithography. This further establishes ASML as the only company that makes EUV lithography systems in the whole wide world. 

“EUV light occurs naturally in outer space. But to make EUV lithography possible, we needed to engineer a way to create such light within a system. So, we developed a radically new approach to generating light for lithography,” ASML said on its website. 

The technology is very complex and produces light wavelengths of 13.5 nanometers (billionths of a metre). The reduction in size is almost 15 times when compared to deep ultraviolet (DUV) lithography, which uses 193 nanometer light.

The EUV lithography system uses powerful lasers and a system of complex mirrors—the flattest material on Earth, according to ASML—to etch integrated circuits on silicon wafers.

“The TWINSCAN NXE:3600D is ASML’s latest-generation lithography system, supporting EUV volume production at the 5 and 3 nm Logic nodes and leading-edge DRAM nodes,” the company said.

ASML Monopoly

Its monopoly has been due to the exploitation of photolithography to an extreme level. Each EUV lithography system made by ASML costs around USD 200 million and is made of thousands of components acquired from nearly 5000 different suppliers. The machines, which are the size of a double-decker bus and weigh around 180 tonnes, are also made up of seven different modules, built around ASML’s manufacturing sites spread across more than 60 locations on three continents. 

The modules are then shipped to Veldhoven, where they are assembled, tested, and then again disassembled for delivery. The exorbitant costs involved means not many can afford them, and not many can afford to make them either. 

With its competitors years away from cracking the technology, ASML has a monopolistic hold on the market, and the company has already begun working on the next generation of lithography systems.

However, competition might be imminent. Recent reports suggest that China might have cracked the lithography code. It is common knowledge that China wants to establish an autonomous semiconductor supply chain within the country to hedge against US sanctions and growing geopolitical and supply chain risks.

Earlier this year, the US blocked the sale of EUV lithography machines to China. However, SMIC, China’s biggest semiconductor manufacturer, indigenously produced 7 nm chips using DUV lithography and is now working on advanced 5 nm chips.

Lithography has been the weak link in China’s semiconductor ecosystem, but now they seem to have cracked the code. Some experts in China believe that the country will be able to achieve a key breakthrough in EUV lithography in less than five years.

“I think China also would love to develop their own EUV competency, their ecosystem for these things. I think it’s going to be very difficult for them to do that, frankly,” JSR chief executive Eric Johnson told the Financial Times.

However, earlier this year, ASML alleged that SMIC might have infringed its trade secrets. With China in the lithography picture, ASML’s monopolistic hold in the market could very well be at stake.

High-NA EUV lithography

ASML has been working on high-NA (​​numerical aperture) EUV scanners, the follow-up to its EUV lithography systems. Even though it is in the R&D phase, it could help ASML stay ahead in the game. 

Still in R&D, the new high-NA EUV system features a 0.55 NA lens capable of 8 nm resolutions, compared to 13 nm for the existing tool. These new machines are expected to cost more than USD 300 million. However, the new technology is not expected to move into production before 2025.

Interestingly, in an interview, Martin van den Brink, chief technology officer at ASML, said that the high-NA EUV lithography could be the end of the game. Besides the occasional debate around the demise of Moore’s Law, the end of the line could have a significant impact on the very future of ASML. 

Without shrink, there is no innovation and could this mean, ASML will cease to be an innovation-driven company? While it’s too early to speculate, ASML has a bright future ahead, at least for a considerable period of time. Chip makers are ramping up production and are lining up at ASML’s office for new machines.