Europe's Biggest Technology Company is Trying to Leave
The story of ASML is too big to ignore.
Hey Everyone,
Welcome to the third edition of Semiconductor Things™, where I seek to break down some of the news in the Semiconductor, AI chips and datacenter space globally to make it more accessible and easy to follow.
There are already some great Semiconductor related Newsletters on Substack, incredible people to follow on X and a plethora of specialized blogs.
With the rise of Generative AI, Nvidia and TSMC and the geopolitical importance of Taiwan, this is now a major topic of me in my watching of the emerging tech space that I do as an analyst, writer, curators and news watcher.
I will be doing a survey of the top Semiconductor Newsletters on Substack at a later date.
The Technology category is an underdog relative to Substack’s baseline audience, this means I’m an outlier here. To survive, I’m building 8+ Newsletters in “emerging tech” coverage. A pilot never seen before on Substack for a one-person team. Full disclosure, I may not make it.
Importe note: I am not native to the Semi space, and it might take a while to get up to speed.
ASML, based in the Netherlands, is one of the last “BigTech” companies of Europe. But there is a Dutch problem now with its ability to scale.
One of the major stories in the semiconductor industry I have been watching in early 2024 is ASML’s role. To say that ASML has a monopoly on magic would be an understatement. The reality reported by Bloomberg recently is thus: “reported threats to quit the Netherlands for France show the AI boom brings tough economic trade-offs.” It’s a curious time for ASML’s future.
Meanwhile, the European Commission recently asked for the semiconductor sector feedback as it is trying to formulate the European Economic Security Strategy amid geopolitical tensions and strategic dependencies of the industry.
ASML actually design and manufacture the lithography machines that are an essential component in chip manufacturing. They are as much a root cause of the global supply chain as TSMC, almost.
They have evolved into the Biggest tech company of the Netherlands and probably all of Europe.
Now in 2024, the Dutch government is secretly working on a plan to keep ASML, the world's largest maker of wafer fab equipment, in the Netherlands amid fears that the company may expand abroad. ASML’s expansion is inevitable, just as TSMC is getting $5 Billion in federal grants from the U.S. government for setting up a chipmaking plant in Arizona.
The wheels are now set in motion for a rapid pace of datacenter and semiconductor globalization and diversification, even as the U.S. itself decouples from globalization. But how does Europe compete with China and especially the U.S. if it doesn’t have its own BigTech players? ASML and SAP are the biggest tech companies that might make that BigTech level of scale.
Although the migrancy issue seems to be a major one for ASML, the Dutch government maintains that the company also wants to move out of The Netherlands in order to be able to grow more. At a certain point global scale means having other fabs in different places, it’s only natural. But the Dutch Government has now embarked on a cross-ministry effort, named 'Operation Beethoven', to convince the company to continue its investments and operations in the country.
It’s about the Talent Dummy
For months, ASML, which sources parts from around the world but assembles its machines in Veldhoven in the the south of the Netherlands, has been warning against any moves that could hinder its ability to attract skilled foreign labour.
It’s weird right?
EUV lithography is the most expensive step in making the advanced microchips that power data centers, cars and iPhones.
The machines are made by only one company: Advanced Semiconductor Materials Lithography.
ASML is one of the most unique monopolies in all of the semiconductor supply chain.
In recent times, the US wants (read: have forced) ASML to stop servicing China-owned chip equipment.
Let’s try to understand ASML’s business and unique position in the world a little bit better in this article.
ASML’s EUV lithography is worthy of its title as the world’s most complex machine. With more than 100,000 components, it is a marvel of innovation.
Extreme Ultraviolet👾
EUV stands for extreme ultraviolet, an incredibly short wavelength of light that ASML generates in large quantities to print small, complex designs on microchips.
The EUV light is created with tiny explosions of molten tin happening at extreme speeds and then bounced off unique Zeiss mirrors that ASML says are the flattest surface in the world. A small percentage of the EUV light particles reach the surface of a silicon wafer, where they print the minuscule designs that determine what each chip will do.
Keep reading with a 7-day free trial
Subscribe to Semiconductor Things™ to keep reading this post and get 7 days of free access to the full post archives.