If you live in The Netherlands, you have most likely heard of ASML. If that is not the case, semiconductors will probably ring a bell. ASML stands for Advanced Semiconductor Materials Lithography, but “advanced” is an understatement. Let’s take a look at why this is.
ASML has been dubbed the “most important tech company in the world” because of its unique market position. The Veldhoven based company does not make semiconductors; it makes the machines to make semiconductors – without ASML there are no chips. Its machines are known as EUVL (extreme ultraviolet lithography) machines.
Being the godfather of semiconductors does not only bring advantages. ASML finds itself in the middle of geopolitical affairs. The United States has blocked the sales of ASML machines, the famed EUVL machines, to China’s largest chip factory, SMIC. There are no other competitors to ASML for the EUVL machines, making them an extremely valuable geopolitical asset. To sketch an idea of how complicated these machines are is a task within itself. The laser beams used to print the chips can generate plasma temperatures 40 times hotter than the Sun’s surface.
The common saying “information is power” could not be more true in the time we live in right now. The race for information supremacy is fuelled by the rise of two geopolitical technological universes: China vs. the West. China is winning the 5G race, but the US still makes the fastest computers and the best fighter jets. But what do fighter jets and 5G infrastructure have in common? Semiconductors.
Reverse engineering an EUVL machine is an almost impossible task. Even if one has the blueprints to build the machine, it is extremely difficult to copy the technology. You simply need the experience and know-how that ASML has. It is simply not just a wild accusation that ASML has been spied on by Chinese and Korean competitors. Once others can make the machines too, it will level the playing field. For now, ASML enjoys no direct competitors and the United States is making sure China will not either.
However, just as ASML faces challenges on the world stage, it also faces challenges back home. Veldhoven, a small place just outside Eindhoven in The Netherlands, and its residents are not all too happy with the chip conglomerate. As the EU wants to become more chip-independent, it is subsidizing key players such as ASML to do its part. With exponential growth comes exponential expansion. What took ASML 38 years to build will be doubled in the next decade. Factories, offices and storage facilities are all part of this. Every month, hundreds of new employees are hired, but they also need a place to stay. This creates tension among the local community because there is already a housing crisis in The Netherlands. As more and more expats are being flown in, the housing prices will increase respectively. Though the chip-giant is the cash cow of the local community, the goodwill of its surrounding members is decreasing. It is definitely interesting to see where the developments around ASML will take us, both on a local and geopolitical level.
Sources:
Bordoloi, P., 2022. Is ASML the Most Important Tech Company in the World?. [online] Analytics India Magazine. Available at: <https://analyticsindiamag.com/is-asml-the-most-important-tech-company-in-the-world/> [Accessed 9 October 2022].
Fitch, A. and Woo, S., 2022. The U.S. vs. China: Who Is Winning the Key Technology Battles?. [online] The Wall Street Journal. Available at: <https://www.wsj.com/articles/the-u-s-vs-china-who-is-winning-the-key-technology-battles-11586548597> [Accessed 9 October 2022].
Hasan, S., 2022. Scientists divided over US blocking key chipmaking equipment sale to China. [online] TRT World. Available at: <https://www.trtworld.com/magazine/scientists-divided-over-us-blocking-key-chipmaking-equipment-sale-to-china-61248> [Accessed 9 October 2022].
Kasteleijn, N., 2022. ASML heeft een groeispurt en dat merken de inwoners van Veldhoven. [online] NOS. Available at: <https://nos.nl/artikel/2444618-asml-heeft-een-groeispurt-en-dat-merken-de-inwoners-van-veldhoven> [Accessed 9 October 2022].
Maxham, A., 2022. ASML Was Spied On By Its ‘Biggest South Korean Customer’, Samsung. [online] Android Headlines. Available at: <https://www.androidheadlines.com/2019/04/asml-espionage-samsung-chipsets.html> [Accessed 9 October 2022].
Ramani, S., 2022. ASML village booming with more facilities – Eindhoven News. [online] Eindhoven News. Available at: <https://eindhovennews.com/news/2022/09/asml-village-booming-with-more-facilities/> [Accessed 9 October 2022].
Shih, W., 2022. Why Is Biden Restricting More Chip Tech To China? It’s Complicated.. [online] Forbes. Available at: <https://www.forbes.com/sites/willyshih/2022/09/14/export-restrictions-on-sale-of-chips-and-equipment-to-china-will-they-work/> [Accessed 9 October 2022].
VPRO Tegenlicht – Het geheim van ASML, 2022. [TV programme] 2: VPRO.
Great article on ASML! Very interesting to read how you acknowledge the cruciality of ASML on a geopolitical playing field, in addition to its crucial stance in the semiconductor industry. I find it a fresh take that you incorporate the perspective of the citizens of Veldhoven. This weekend, the Dutch newspaper NRC did a piece on TSMC, the biggest chip manufacturer in the world. Coincidentally, it depicted how TSMC is an asset to Taiwan, but also shed light on how Taiwanese are proud and keen to protect TSMC. With ASML and the citizens of Veldhoven, it seems the opposite. I understand how the frustration is accumulating. It would be strategic of ASML to involve external stakeholders like the surrounding living areas to make the expansion as smooth as possible. Do you have any ideas how they could do so? I’m thinking they could look at TSMC’s strategy and be inspired. Possibly they can use it as an example for how they can change Veldhoven’s frustration to pride, as is the case in Taiwan. But time will tell! And deeming from your article, the wait won’t be too long.