Many cities claim to be Europe’s Silicon Valley: Stockholm has the most unicorns per capita, and London is the continent’s venture capital capital powerhouse. Only the little Dutch town of Veldhoven, with a population of 45,000, is home to Europe’s closest approach to a huge digital behemoth. ASML, a business that develops the machinery that create semiconductor chips, has grown from a modest beginning near the Belgian border to become a vital cog in the worldwide technology economy. It was designated Europe’s largest public tech business by market cap by the end of 2021, propelled by a global chip scarcity and a pandemic demand for gadgets. ASML was founded in 1984 by Philips, a Dutch electronics company, to help other firms create semiconductor chips, which are the technical brains of phones, automobiles, computers, and smart homes. ASML is seen as a bottleneck by experts: According to the business, it controls between 80 and 85 percent of the global market for semiconductor lithography systems.
That market share jumps to 100 percent when it comes to the most modern sort of chipmaking lithography machine, known as extreme ultraviolet lithography (EUV).Despite ASML’s recent success, one area of worry looms on the future. The corporation has been barred from exporting its most advanced devices to China as a result of trade tensions between Washington and Beijing. Although China only exports 7.6% of the world’s chips, the Semiconductor Industry Association reports that this percentage is rapidly increasing, and chips are one of seven technologies Beijing is pursuing. Blocking China from the global supply chain has sparked fears that the nation would hurry to construct its own version of ASML, jeopardising the Dutch firm’s disproportionate position in the semiconductor industry. ASML’s supremacy in this field is today undisputed, thanks to the risk it took in the 1990s to pursue the development of EUV technology, which employs small beams of light to carve patterns on the silicon components that make up semiconductor chips.ASML thinks that competitors would need at least 15 years to reproduce its most sophisticated technologies.
“Several of the competitive companies [in the 1990s] decided not to take the risk of investing in EUV because it appeared to be so difficult, so expensive, and possibly never work,” says Chris Miller, an assistant professor of international history at Tufts University who is working on a book about the geopolitical history of the computer chip. ASML’s market capitalization has risen to almost $300 billion as a result of that gamble, and its stock price has more than quadrupled since the start of 2020. It’s becoming increasingly likely that it will become Europe’s first firm valued at more than $1 trillion. The transition to EUV was time-consuming and costly. Customers like as Intel, Samsung, and the Taiwan Semiconductor Manufacturing Firm had to be persuaded to acquire stock in the company in order for the research to be funded. The procedure had cost $9 billion by the time it was able to deploy its first commercial EUV machines in 2017. The payback, though, was enormous. It is presently the only business capable of supplying EUV equipment to industry heavyweights like TSMC and Intel, who produce the most advanced form of chips used in contemporary phones and gaming consoles. The firm had sold 125 EUV units as of September 2021. That may not seem like a lot, but ASML sells these machines for more than $100 million apiece since there aren’t many firms capable of producing the most advanced types of chips with them. However, a political storm might derail ASML’s expansion plans. The emergence of Donald Trump in the White House coincided with the company’s success in EUVs. The Trump administration urged the Dutch government to prevent ASML from executing an order for an EUV machine from a Chinese customer, alleged to be the Semiconductor Manufacturing International Corporation or SMIC, in 2018.