Summary
Highlights
ASML, a Dutch company, has a monopoly on EUV lithography machines, essential for manufacturing advanced processor chips. These machines, costing up to $200 million, are vital in the chip-making process. The demand for ASML's technology is surging due to the global chip shortage, with major chipmakers like TSMC, Intel, and Samsung competing for their next-generation machines.
ASML started as a small research group within Philips in 1984 and has since grown into a global leader. They went public in 1995 and through strategic acquisitions, including U.S. tech companies, solidified their position. Customer investment was critical to fund the research and development of EUV Technology.
EUV lithography uses extreme ultraviolet light to print smaller and more complex chips. This process involves shooting molten tin droplets with lasers to generate EUV light, which is then bounced off extremely flat mirrors to print designs on silicon wafers.
Each EUV machine comprises seven modules built across ASML's global manufacturing sites, then assembled and tested in the Netherlands. The complexity of shipping these machines require 20 trucks and three 747s. In 2021, ASML shipped 42 EUV machines, with a limited number of customers, including TSMC, Samsung, and Intel, dominating the market.
The global chip shortage poses a challenge to ASML, impacting their supply chain. Geopolitical factors and export controls also affect ASML, particularly regarding sales to China. The company is developing next-generation EUV machines (High NA) while addressing the growing demand for chips and domestic production initiatives in various countries.