ASML: How the Netherlands company has the monopoly in the Semiconductor Market

ASML is the only business in the world that owns the technology and manufactures the machinery used to create physical chips from silicon wafers. Without ASML’s EUV technology, chipmakers such as TSMC, NVIDIA, and Intel will be unable to produce the processors they do.

The same technique is followed by TSMC, NVIDIA, Intel, AMD, and every other tech firm that manufactures its own silicon chips. All of these chip manufacturers employ wafers, which are enormous sheets of silicon manufactured from a unique type of sand.

The process used by all of these firms to slice and cut the wafer is known as UV lithography. There are now different classes of lithography that differ in how finely or thinly a wafer is sliced. This is also referred to as process and is measured in nanometers.

And ASML owns the Ultraviolet lithography technology used by all of these chipmakers. ASML also manufactures the machinery used by chipmakers to physically slice and cut wafers.

EUV, or Extreme Ultraviolet lithography, is the most recent method for slicing silicon wafers. ASML is the only company with the technology to develop chip production machines using extreme ultraviolet lithography, and chip manufacturers have asserted that EUV represents the future of slicing wafers.

Deep Ultraviolet Lithography, or DUV, is another method or technology for slicing wafers, but it is an older and less efficient process. When it comes to Ultraviolet Lithography, ASML faces some rivalry from Canon and Nikon, yet even in this environment, ASML controls approximately 62% of the market.

ASML sells its EUV chip-slicing gear for around $200 million each set, and all major chip producers, including Intel, NVIDIA, and TSMC, are required to purchase these machines for fundamental functionalities.

Because they used to purchase their machinery much before Intel, Samsung, and other major chip producers, Taiwan’s TSMC has a particular arrangement with ASML. As a result, TSMC and the companies that used their silicon enjoyed a modest generational advantage over their competitors.

Western countries, mostly the United States, have attempted to put various rules and trade embargoes on countries such as Japan and the Netherlands, primarily to prevent the Chinese from accessing EUV chipmaking, and hence the next generation of chips and electronic systems.

This is also why the US has been attempting to persuade the Netherlands to impose sanctions on ASML and prevent them from interacting with China. To ASML’s credit, they have suspended their ties with China and have not sold them any new EUV equipment, but have continued to sell them old DUV equipment.

The Dutch, on the other hand, have stated unequivocally that they will not comply with US requests to impose sanctions on China. Liesje Schreinemacher, the Dutch Minister of Foreign Trade, has stated that the Netherlands will lead conversations with countries such as Japan, South Korea, Taiwan, Germany, and France.

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