How the global semiconductor battle is shaping the future of ASML

How the global semiconductor battle is shaping the future of ASML


Except for one point on the horizon: geopolitics, the future looks bright for ASML, Europe’s most valuable technology company.As the manufacturer of what A technical director called “the most complex machine made by humans”, ASML is benefiting from the global prosperity of the semiconductors that run our connected world.

On Wednesday, the Dutch company that sells lithography machines to the world’s leading chip manufacturers announced Outstanding quarterly performanceThe company now has a stock market value of approximately $300 billion, which has grown nearly six times in the past five years.Growth prospects remain attractive: ASML predicts that the semiconductor industry’s consolidated sales will double To $1tn By 2030. “Our customers desire these machines,” said Peter Wennink, CEO of ASML.

However, as with other semiconductor manufacturers, Asmek has fallen into the increasingly tightening vice between China and the United States in the process of vying for technological hegemony. How the company handles this dilemma will tell us a lot about the future shape of our technological world. Under pressure from the United States, the Dutch government is reviewing the export license of Asim’s most advanced machines to China. Dividing the world into blue (US) and red (China) supply chains could tear one of its most integrated industries. For a company with 5,000 suppliers, this can make life tricky and costly.

The focus of export control is ASML’s extreme ultraviolet (EUV) technology, which is a miracle of modern engineering, which uses light to etch integrated circuits onto silicon wafers on a very small scale. Each EUV machine weighs 180 tons and costs more than US$150 million. ASML sold them to companies such as TSMC, Samsung and Intel. Chinese manufacturers also seem to be eager to buy them.

Currently, more than three-quarters of ASML’s technology sales are sold to Asia, mainly Taiwan, South Korea and China. However, both the United States and the European Union intend to strengthen their own semiconductor manufacturing capabilities, dragging the industry’s focus to the west.under Wassenaar Package Among 42 countries, including the Netherlands, the export of dual-use technologies must be approved by the government. Joe Biden may have replaced Donald Trump, but this has not changed the determination of the United States to cut off the technological foundation from China. “Youan” Semiconductor Manufacturing.

In the short term, ASML may benefit from this market “inefficiency” because the company curiously calls it a geopolitical reordering.America and European governments Is attracting chip manufacturers to open factories in the local area. But no matter where they are built, these companies will continue to be enthusiastic customers of ASML machines. ASML has also benefited from the global economic rebound curbed by the pandemic and the long-term shift to device-side or “edge” computing.

Pierre Ferragu, managing partner of New Street Research, said that the US strategy is straightforward and well executed, and encourages its traditional allies to follow suit. For example, several European countries are now rejecting China’s Huawei to operate 5G telecom networks. “China will not have leading semiconductor technology in two decades. It is only natural for Europe to support the United States,” he said.

But one American Silicon Industry Association Report The Boston Consulting Group warned that a strategic decoupling from China could be counterproductive, leading to a slowdown in innovation, loss of market share, and a substantial increase in China’s manufacturing capabilities. The United States may simply be stimulating the competition it wants to stifle.

For its part, ASML recognizes that export controls are effective tools to solve “targeted, specific, national security issues,” but questioned that they would cause harm if they were used excessively. At a time of global chip shortages, they may further undermine manufacturing capabilities.

The US’s technology weaponization policy may also trigger geopolitical tensions surrounding Taiwan, Taiwan’s current most advanced chip manufacturing base and places where China has “unknown red lines,” said Paul Triolo, the principal. Eurasia GroupTechnical practice. “The government should intervene very carefully in this global supply chain. For 40 years, we have benefited from a very strong, open and free supply chain that has brought a lot of innovation.”

ASML has done a good job in establishing a dominant position in a critical, fast-growing, capital-intensive industry. But its future success will depend in part on its acquisition of a new skill: how to play 3D geopolitical chess.

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