ASML chief: ‘There is only one company making those machines’

ASML, a Dutch company, holds a unique monopoly in manufacturing extreme ultraviolet (EUV) lithography machines, essential for producing the most advanced semiconductors used in AI. These machines, roughly the size of a school bus and costing between $200 million and $400 million, are the only ones capable of printing the microscopic patterns on silicon wafers required for leading-edge chips. ASML's dominance has propelled it to become Europe's most valuable company, with a valuation exceeding $500 billion.

CEO Christophe Fouquet, who took the helm in 2024, confidently states that no competitor is likely to emerge in this space. He explains that the technology involves a chain of almost impossible steps, such as firing lasers at molten tin to create plasma hotter than the sun's surface, which then produces EUV light. This light is reflected off atomic-precision mirrors, manufactured by a single supplier, Carl Zeiss SMT, through decades of integrated development with ASML.

Economically, replicating ASML's technology is not viable for potential rivals. Any new entrant would sell too few machines annually to recoup development costs, yet these machines would still need to deliver near-perfect reliability from day one. Chip fabrication plants, like those operated by TSMC, run continuously, and a single day of lost output can cost hundreds of millions of dollars. This high risk makes chipmakers unwilling to experiment with unproven EUV tools, preventing any rival from accumulating the necessary field data to improve. Companies like Nikon and Canon, once ASML's peers, withdrew from EUV development over a decade ago due to these challenges, and no credible successor has since emerged.

Fouquet also highlighted that while newer generations of EUV machines, like high-NA EUV (costing over $350 million), are more expensive upfront, they lead to significant cost reductions, up to 20% or 30%, in manufacturing wafers for advanced layers. This continuous innovation and cost efficiency further solidify ASML's position, as it effectively makes chip production cheaper for its customers despite the high price tag of its equipment.