# Computer chip giant ASML places big bets on a tiny future Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-05-20 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: ASML ventures into uncharted territory with new chip Meta Description: Discover how ASML, a semiconductor giant, is pushing boundaries with machines larger than life to create microscopic circuitry for next-gen chips. URL: https://financedigest.com/computer-chip-giant-asml-places-big-bets-on-a-tiny-futurehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-05-20t055200z2lynxnpei4j048rtroptp4tech-asml-1736815697295-compressed.jpg) By Toby Sterling VELDHOVEN, Netherlands (Reuters) – ASML, a semiconductor industry and stock market giant, has to think smaller. Or maybe bigger. It is building machines the size of double-decker buses, weighing over 200 tonnes, in its quest to produce beams of focused light that create the microscopic circuitry on computer [chips used in everything from phones and laptops to cars](https://www.financedigest.com/upset-by-high-prices-gms-cruise-develops-its-own-chips-for-self-driving-cars.html "Upset by high prices, GM’s Cruise develops its own chips for self-driving cars") and AI. The company has enjoyed a rosy decade, its [shares leaping 1,000% to take its value past 200 billion](https://www.financedigest.com/abb-to-launch-1-billion-share-buyback-on-april-3.html "ABB to launch billion share buyback on April 3") euros as it swept up most of the world’s business for these lithography systems. It’s now preparing to roll out a new $400 million machine for next-generation [chips which it hopes will be its flagship by the late 2020s but for now remains](https://www.financedigest.com/chip-and-pin-cards-remain-consumers-first-choice-for-payments.html "Chip and pin cards remain consumers’ first choice for payments") an engineering challenge. Executives at ASML’s headquarters in the Dutch town of Veldhoven told Reuters a prototype was on track to be completed in the first half of 2023. They said the company and longtime R&D partner IMEC were setting up a test lab on the [spot – a first – so top](https://www.financedigest.com/new-york-holds-top-spot-london-second-in-z-yen-financial-centre-survey.html "New York holds top spot, London second in Z/Yen financial centre survey") chipmakers and their suppliers can explore the machine’s properties and prepare to use production models as early as 2025. Yet, as [investors expect](https://www.financedigest.com/wave-of-lawsuits-over-ftx-expected-but-investors-will-face-legal-hurdles.html "‘Wave’ of lawsuits over FTX expected, but investors will face legal hurdles") further dominance and growth to justify ASML’s valuation at 35 times 2021 earnings, there is little margin for error should the company encounter technical or supply-chain snags. “Every check is green right now,” said Christophe Fouquet, head of EUV programs at ASML. “But, you know, we still have to see it all (assembled) together.” EUV stands for extreme ultraviolet, the wavelength of light used by ASML’s most [advanced machines](https://www.financedigest.com/squirro-launches-new-advanced-ai-platform-trinity-to-enable-machine-learning-to-deliver-insights-driven-applications-across-the-enterprise.html "Squirro launches new advanced AI platform TRINITY to enable Machine Learning to deliver insights driven applications across the enterprise"). The fortunes of the project are also important for ASML’s customers, chipmakers racing to [expand production amid a global](https://www.financedigest.com/bill-gates-south-korea-expand-global-health-partnership.html "Bill Gates, South Korea expand global health partnership") shortage. They include U.S. player Intel, [South Korea’s](https://www.financedigest.com/south-korea-has-not-supplied-lethal-weapons-to-ukraine-president-says.html "South Korea has not supplied lethal weapons to Ukraine, president says") Samsung and Taiwan’s TSMC, the biggest, which makes chips for the likes of Apple, AMD and Nvidia. [Industry specialist Dan Hutcheson of VLSI Research](https://www.financedigest.com/cone-crusher-markets-advanced-research-growth-opportunities-in-global-industry-by-2030-edited-by-leading-research-firm.html "Cone Crusher Market’s advanced Research & Growth Opportunities in Global Industry by 2030 Edited by Leading Research Firm"), who is not involved with the ASML project, said the new technology – known as a “High-NA” version of EUV – could provide a significant advantage to some chipmakers. “It’s a bit like who’s got the best gun,” he said. “So either ASML makes it happen or they don’t make it happen,” he added. “But if they make it happen, and you don’t have your orders and you miss out on this, you’ve immediately made yourself non-competitive.” He said TSMC eclipsed its rivals by integrating ASML’s EUV machines first in the late 2010s – a mistake Intel CEO Pat Gelsinger has vowed not to make again with High-NA. Lithography is a [key determinant](https://www.financedigest.com/determination-and-innovation-the-key-for-fast-growing-uc-firm.html "Determination and Innovation the Key for Fast Growing UC Firm") of how small circuitry on a chip can get, with High-NA promising a 66% reduction. Smaller is better in chipmaking, as the more transistors you pack in the same space, the faster and more [energy efficient](https://www.financedigest.com/avoid-new-green-tax-with-energy-efficient-b2l-investments-in-manchesters-city-centre.html "Avoid new ‘Green Tax’ with energy efficient B2L investments in Manchester’s city centre") a chip can be. Circuitry is now approaching the atomic level, leading to predictions that the [end is nigh for “Moore’s Law”](https://www.financedigest.com/eu-approves-law-to-end-sales-of-new-co2-emitting-cars-by-2035.html "EU approves law to end sales of new CO2-emitting cars by 2035"), a famous 1960’s observation that the number of transistors on a microchip doubles about every two years. “If they (ASML) don’t succeed it will become difficult to continue with Moore’s Law,” said Jos Versteeg, an analyst at Dutch-based bank InsingerGilissen, though he noted engineers had defied similar doubts in the past. FIRST LIGHT ON SILICON Since 2000, ASML has rapidly taken [market share](https://www.financedigest.com/global-splined-sleeves-market-size-share-trend-growth-forecast-to-2031.html "Global Splined Sleeves Market Size, Share, Trend & Growth Forecast To 2031") from Japanese competitors Nikon and Canon, which now mainly focus on older technology. ASML [controls more than 90% of the lithography market](https://www.financedigest.com/constructive-digitization-to-drive-the-infection-control-market.html "Constructive Digitization to drive the Infection Control Market"). No competitor is attempting to [build an EUV system](https://www.financedigest.com/zencash-partners-with-software-developer-infopulse-to-build-treasury-voting-system.html "ZenCash Partners With Software Developer Infopulse to Build Treasury Voting System"), citing high development costs. Shortages of ASML’s machines, which cost up to $160 million each, are a bottleneck for chipmakers, who have [plans to spend more than $100 billion in the coming years](https://www.financedigest.com/3-factors-to-plan-for-in-2017-a-year-like-none-other.html "3 Factors to Plan for in 2017, A Year Like None Other") to build extra fabrication plants to meet demand. The High-NA [machines will be about 30%](https://www.financedigest.com/fico-machine-learning-algorithms-improve-card-not-present-fraud-detection-by-30.html "FICO Machine Learning Algorithms Improve Card-Not-Present Fraud Detection by 30%") bigger than their predecessors, which themselves require three Boeing 747s to carry them in sections. IMEC, a non-profit research [group that cooperates with companies](https://www.financedigest.com/incentive-fm-group-wins-contract-with-global-events-company.html "Incentive Fm Group Wins Contract With Global Events Company") across the semiconductor industry, believes setting up the lab at ASML could save up to a year in development time. ASML said it had five orders for pilot machines, which should be delivered in 2024, and “more than five” orders from five different [customers for faster production models for delivery](https://www.financedigest.com/bahamas-regulator-holds-ftx-assets-pending-delivery-to-customers-creditors.html "Bahamas regulator holds FTX assets pending delivery to customers, creditors") starting in 2025. But this is no slam-dunk. There are formidable [challenges in integrating](https://www.financedigest.com/ma-integration-challenges-cultural-alignment-and-change-management.html "M&A Integration Challenges: Cultural Alignment and Change Management") a host of complex components, including an optics system of polished, hyper-smooth curved mirrors, which are being built in a vacuum by Germany’s Carl Zeiss. Versteeg at InsingerGilissen said that while ASML enjoyed a near monopoly, its [“pricing is dependent on the productivity of the machines”](https://www.financedigest.com/machine-learning-can-improve-pricing-performance.html "How machine learning can improve pricing performance"). Meanwhile, it must sell EUV tools to the shrinking number of companies that make leading-edge chips, which include [memory chip makers](https://www.financedigest.com/u-s-considers-crackdown-on-memory-chip-makers-in-china.html "U.S. considers crackdown on memory chip makers in China") SK Hynix and Micron. ASML is also tied to the wider fortunes of the cyclical chip industry, which some researchers expect to [double past $1 trillion in annual sales](https://www.financedigest.com/geelys-ev-brand-zeekr-aims-to-double-sales-in-2023-expand-in-europe.html "Geely’s EV brand Zeekr aims to double sales in 2023, expand in Europe") this decade. Fouquet worries most about supply-chain issues. Right now, and like with every other product, we see some stress in the [supply chain](https://www.financedigest.com/in-the-supply-chain-clean-data-is-the-fuel-of-the-future.html "In the supply chain, clean data is the fuel of the future"), and this is if you ask me today, probably the biggest challenge we have with High-NA. (Reporting by Toby Sterling; Editing by Pravin Char) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---