ASML, Europe's Most Valuable Tech Firm, Is at the Heart of the US-China Chip War (bloomberg.com) 49
The low-profile firm that has become crucial to a half-trillion-dollar global industry. From a report: In 1984, Martin van den Brink, a young Dutch engineer, joined a newly created venture in a quiet corner of the Netherlands. Little did he know then that about 40 years on the company would be so crucial to the $580 billion semiconductor industry that it would be the epicenter of a US-China chip war. ASML Holding NV, where Van den Brink is now the chief technology officer, practically owns the market for a critical piece of equipment needed to produce the brains of everything that makes modern life possible -- from cars and smartphones to computers, microwaves and airplanes. With the company's high-end machines churning out chips that can also go into state-of-the-art weapons and artificial intelligence devices, ASML is effectively being treated as critical infrastructure for US national security and has become a target of industrial espionage for China. "I never expected to be where we are today," said Van den Brink.
Over his nearly four decades at the company, ASML has gone from a bit player competing with the likes of Nikon, Canon and Ultratech to the world's only maker of very high-end semiconductor lithography equipment. Its ascent has made it Europe's most valuable technology company, with a market capitalization of over $247 billion -- more than twice that of its customer Intel. In an industry where devices typically cost $10 million, ASML commands about $180 million for its current top-end machine. And although the chip market has softened recently, ASML is still growing and its long-term outlook seems intact, thanks to the insatiable demand for computing power.
"This is a company that the world can't exist without," said Jon Bathgate, a fund manager at NZS Capital in Denver, which has about $2 billion under management, with ASML as one of its biggest holdings. "They've got a 20-year head start... Investors have clearly realized how important ASML is as a company and how difficult it would be to replicate. It's a natural monopoly with secular growth winds. That's unique." As chips become for geopolitics in the 21st century what oil was in the last one, ASML's singular success has thrust it squarely in the crosshairs of the intensifying tensions between the US and China. With the US focused on the strategic importance of semiconductors, Presidents Donald Trump and Joe Biden have done everything to ensure that China is a couple of generations behind in chips. No company is more critical to that effort than ASML.
Over his nearly four decades at the company, ASML has gone from a bit player competing with the likes of Nikon, Canon and Ultratech to the world's only maker of very high-end semiconductor lithography equipment. Its ascent has made it Europe's most valuable technology company, with a market capitalization of over $247 billion -- more than twice that of its customer Intel. In an industry where devices typically cost $10 million, ASML commands about $180 million for its current top-end machine. And although the chip market has softened recently, ASML is still growing and its long-term outlook seems intact, thanks to the insatiable demand for computing power.
"This is a company that the world can't exist without," said Jon Bathgate, a fund manager at NZS Capital in Denver, which has about $2 billion under management, with ASML as one of its biggest holdings. "They've got a 20-year head start... Investors have clearly realized how important ASML is as a company and how difficult it would be to replicate. It's a natural monopoly with secular growth winds. That's unique." As chips become for geopolitics in the 21st century what oil was in the last one, ASML's singular success has thrust it squarely in the crosshairs of the intensifying tensions between the US and China. With the US focused on the strategic importance of semiconductors, Presidents Donald Trump and Joe Biden have done everything to ensure that China is a couple of generations behind in chips. No company is more critical to that effort than ASML.
And the US forced China to compete (Score:3)
Does anyone doubt that China will invest whatever it takes to be the world leader?
Re:And the US forced China to compete (Score:4, Insightful)
How much will ASML be worth when the world's second largest economy catches up and floods the market?
Does anyone doubt that China will invest whatever it takes to be the world leader?
There is plenty of doubt that other people can catch up with their EUV lithography gear any time soon. It'll happen, but it could be years.
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Re:And the US forced China to compete (Score:5, Interesting)
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Re:And the US forced China to compete (Score:4, Insightful)
As a Dutch company it's subject to the Dutch government, which can be leaned on by the US government. Typically it's military or intelligence blackmail because that evades most public scrutiny, be a real shame if your high-tech military XYZ stopped working because the US-made ABC you need for it got tangled up in export paperwork, or the intelligence we feed you got delayed due to red tape. Tell you what, make sure ASML doesn't have anything to do with China and the paperwork will suddenly be sorted out and the delays will vanish.
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How much will ASML be worth when the world's second largest economy catches up and floods the market?
Does anyone doubt that China will invest whatever it takes to be the world leader?
There is plenty of doubt that other people can catch up with their EUV lithography gear any time soon. It'll happen, but it could be years.
There are multiple ways to "invest." Greenfield research is one way. Industrial espionage is another. For challenging problems, the latter is more efficient. For example, when the US dropped atomic bombs on Japan, the Soviets were able to develop their own bomb in four years, despite the huge challenges in designing a working bomb.
Re: And the US forced China to compete (Score:1)
You don't even need to do "industrial espionage". Just because you already know what works gives you a starting point.
Also, "years" isn't necessarily a long time, and they've already been at it for "years". They already can meet the majority of needs, even if it isn't cutting edge...ie cutting edge isn't what is needed in the majority of cases.
They also have more motivation to attack the problem on multiple fronts, eg by using existing techniques, but also developing new ones so they can "leap frog" the pro
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For example, when the US dropped atomic bombs on Japan, the Soviets were able to develop their own bomb in four years, despite the huge challenges in designing a working bomb.
That only worked because soviet Physicists were always top notch, it was just the manufacturing base that was not large enough for the country. Yes, there was an espionage aspect, but that will at most have gained them a couple of years. What got them there this fast is knowledge that it was actually possible and basically having everything needed available, just not focussed on this task before. The situation with ASML is not similar. Compared to the machinery ASML makes, an atomic bomb is a primitive, cru
Re:And the US forced China to compete (Score:5, Informative)
How much will ASML be worth when the world's second largest economy catches up and floods the market?
Does anyone doubt that China will invest whatever it takes to be the world leader?
Good luck with that. It is not just a matter of throwing cash at the problem.
Even if you understood the science involved, and cloned the designs of the machines that ASML makes, getting them to work (not just function-but reliably produce high quality, error-free, output) is HARD. You would spend a decade learning how to do what they have already mastered -meanwhile they will have advanced further.
I encourage everyone to invest the time and effort in advancing the state of the art, but make no mistake ASML has a massive head start.
Re:And the US forced China to compete (Score:4, Insightful)
I don't think we should bank on that. Underestimating China hasn't worked very well for us so far.
Re:And the US forced China to compete (Score:4, Interesting)
I don't think we should bank on that. Underestimating China hasn't worked very well for us so far.
Intel thought they could easily reproduce what ASML does on their own and look where it got them. Admittedly some of that was their own stubbornness in exactly which feature sizes they wanted to reduce, but still. Their 14nm process is 50% better in raw logic density than anyone else's and they thought they could do it again.
After their 10nm debacle they have fully and enthusiastically embraced the marketing bullshit definitions of process nodes so they can declare success regardless of what is ultimately produced by their next node, but now that their chips are the slower, hotter, more power-hungry ones instead of AMD, it's self-evident that the problem is truly hard.
And China doesn't have an Intel to start from.
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Actually it has. China have demonstrated a good ability to throw labour at problems that are resolved with labour and little more. They are very much decades behind in any tech related field. Even their factory based production exists largely because of low cost climate and not because they have developed any unique technology that gives them an advantage.
As this isn't a problem you can throw people at, or just ignore environmental or safety protections, there's really no reason to think that China can catc
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Same for jet engines. China still can't make one that is comparable to what GE or RR released in the 1980s.
Their high speed rail has catched up, but only because they have paid for technology transfer from Siemens, Alstom, Bombardier, Kawasaki and Hitachi first.
Re:And the US forced China to compete (Score:5, Interesting)
The article implies the technology came out of nowhere but the "quiet corner" of the Netherlands was in fact a corner on the global HQ campus of Philips, back then the second largest electronics company in the world right after Sony, inventors of the compact disc and DVD and such, and in the same city as the Eindhoven University of Technology TUE (The MIT of the Netherlands). These guys know their lasers and their lead is real (barring any massive spy leak)
Re:And the US forced China to compete (Score:4, Funny)
Shhhh, stop sharing the secret. We're quite happy with the entire world thinking we're nothing but a bunch of tulip farmers ;-)
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Indeed. And I do not think even the complete plans and software for these machines leaking to China would do much. The parts that go into these devices are not things you can buy in a hardware store, or really at all. The specialized manufacturing chain to make these devices is _deep_. And you need the people to do it. Philips always has had excellent engineers and ASML depends on people that can do really advanced stuff and keep at it for decades. These people do not grow on trees. The more restrictive and
Just like they broke the Boeing Airbus duopoly? (Score:1)
I don't doubt that China will invest "whatever it takes", but when will they get results?
Boeing and Airbus have ruled the skies with widebody passenger planes for decades. China is the largest aviation market in the world, yet scarcely participates in the production of jetliners. Widebodies are the prize, but China hasn't even caught up with 100+ seat narrowbodies: Comac has delivered 1 (one!) C919. American, European, Russian, Brazilian, and Canadian aircraft companies have managed to deliver 100+ seat pla
Re: Just like they broke the Boeing Airbus duopoly (Score:1)
They can still buy such aircraft for reasonable prices, so the comparison is not the same. Look what happens when you cut them off completely, like space tech.
They're really not stupid. You might even be able to say they could develop things more quickly that elsewhere since they're forced to focus on the tech they're cut off from. Their system of government is also more able to focus resources accordingly and with longer term objectives.
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Their system of government is also more able to focus resources accordingly and with longer term objectives.
Their system of government is fully capable of producing diplomats like Lu Shaye. Who brings nothing but trouble to his master, ruins his master's scheme to divide the West, and exposes how inefficient that system of government is you are such a fan of. They're able to make quick decisions on resource allocations, sure. What is much less certain, is that whether their "longer term objectives" is even well agreed within the party, much less achieved eventually.
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Yeah, so the government isn't one person, but made of individuals, each with their own ideas, thoughts and opinion. That's true.
You seem to have a strange idea of "his master"'s scheme. The West is dividing itself...all the PRC has to do is sit and watch. I'd say that it supremely efficient.
Regarding long term objectives being achievable, I think they've basically proved they are capable in that respect. I'm sure not all objectives are achieved, but they're able to adapt and move on, without having to flip
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without having to flip flop between opposites like in the west
This is only true for countries with 2 parties and a FPTP system. Many governments adopt proportional representations with many parties, they see much less flip flops between opposites. Therefore, the flip-flopping has nothing to do with a government being democratic. It has much more to do with how democracy is implemented.
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Depends. If they are 20 years ahead now, they may still be 20 years ahead in 20 years. So far they have not screwed up and they can do things nobody else on this planet can. This is not something they got to accidentally. It is people, company culture and research contacts. It is not something you can replicate by throwing lots of money at the problem. Pretty much the only way China will eventually be able to replicate what ASML can do is if the technology stops to advance because there is a hard wall. If t
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Fortunately Eindhoven is not at risk of earthquakes [oecd.org] and is in a politically stable country and exists in >60 locations [asml.com]. But you have a good point.
Nation security -So does that mean (Score:2)
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America is in no way incompetent when it comes to soft power and its application. It would be an astounding display of incompetence if we were ever to have to resort to something as gauche as physically attacking a shipment from ASML.
Re: Nation security -So does that mean (Score:1)
It'd almost be like attacking a gas pipeline.
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Also note that attacking an ASML shipment could mean the US gets cut off from this advanced tech and what it produces as well. That would be economic suicide. Hence this i not going to happen. The US _cannot_ afford to really alienate Europe.
Could ASML be a bargaining chip to free Taiwan? (Score:1)
The EU and ASML leadership are very apologetic about the whole business. I wonder if by combining ASML and some other concessions and letting the EU take the lead, making it look like a compromise for the US, there could be some face saving way to finally break the Taiwan mexican standoff?
China gets EUV and some favourable decisions on maritime concessions, Republic of China becomes Republic of Taiwan and a huge powderkeg in the region is defused? Nice to dream.
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Nice to dream.
Yes, it is.
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Not likely. The point of restricting China's access to lithography equipment is to hobble their economy. The US seems intent on evacuating their chip supply from Taiwan, which probably means that Taiwan is going to be on their own when that process is sufficiently complete.
Re: Could ASML be a bargaining chip to free Taiwan (Score:1)
So long as there's a risk of the USA having a presence on Taiwan, I can't see that letting China split into two is an option for the PRC.
They did let various other land areas split off, but iinm that was when ROC ruled all of China. Iinm, the PRC consider it am existential threat to have people who so readily and frequently call the PRC an enemy to have military bases so close it. It is already has its coastline almost "surrounded".
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Or the US could simply go to the Philippines and South Korea, it makes only a fractional difference ... much like Ukraine to Russian security. Taiwan and Ukraine aren't about, land, resources or security. They are about nationalism, face and population. Saving face might be possible.
Re: Could ASML be a bargaining chip to free Taiwa (Score:1)
They're already in those places, and others, but Taiwan is a gap that needs to be closed to prevent PLAN access to the Pacific.
Indeed, it isn't just that, but the difference is there.
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The only theoretical solve (though practically nearly impossible) for China to become democratic and human-rights-respecting is for some organization within or outside China (the CIA? lol prolly not) to foster some (reverse?) Manchurian candidates to gain leadership positions in China who would over time introduce elections/democracy. Something like that is how the feds brought down the KKK via COINTELPRO if I recall correctly. Kind of like what MAGA-idiots think George Soros is doing in the US (though he i
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You want to attack a NATO country and steal a rather large, valuable and complex organization and its tools? Good luck with that. The US would find itself isolated and in a deep, deep recession so fast it would be staggering. And, of course, there _will_ be contingency plans for such a case and you would get neither people nor equipment. Same as China invading Taiwan will/would not get any part of TMSC that matters.
ASMR - a way out? (Score:2)
Some Chinese language speakers find it hard to distinguish the letter L and R. Therefore I propose instead of ASML we send them a bunch of ASMR videos. It should at least buy us some time before we figure out what to do next.