The $400 million machine powering the future of chipmaking

ASML, a Dutch company, is a cornerstone of the microchip industry. Their lithography machines are essential for creating the increasingly tiny circuitry needed for powerful chips in phones and AI. These machines use light to pattern transistors and other components onto silicon wafers. If you want to make advanced chips, ASML is indispensable.

Nine years ago, ASML revolutionized chipmaking with extreme-ultraviolet (EUV) light machines. These machines, a result of a 16-year R&D effort and a $10 billion investment, initially achieved a resolution of 13 nanometers. Their latest machine pushes this boundary further, boasting an impressive 8-nanometer resolution, equivalent to the width of about 40 silicon atoms. Despite a staggering price of $400 million each, chipmakers eagerly acquire them to stay ahead in the race for improved chips.

The AI industry's rapid expansion has intensified the demand for denser, more powerful chips. Companies like OpenAI and Anthropic require cutting-edge hardware to train and deploy advanced AI models. ASML's innovations are crucial for sustaining this growth, as their CTO, Marco Pieters, suggests we have only seen "the tip of the iceberg" in AI's potential.

ASML's dominant position, controlling approximately 90% of global chip-lithography tools, has significant geopolitical implications. This duopoly, along with TSMC, raises concerns about supply chain concentration and national security. The US government, for instance, has leveraged this control to impose export restrictions on ASML's high-end machines to China, highlighting the strategic importance of chipmaking technology in the global arena.