Monopoly: The Netherlands’ ASML, which dominates the global chip industry

When it comes to the so-called silicon chips, there is one company that has complete control over the global semiconductor industry. And while Taiwan and China may be the biggest chip-making countries in the world right now, they wouldn’t be what they are without licensing some core technology and machinery from this company.

Of course, it is about the Dutch company ASML Holdings, a multinational corporation, which today is known primarily for its semiconductor business, Firstpost writes.

How are silicon chips made?

Whether it’s TSMC, NVIDIA, Intel, AMD, or another tech giant that makes its own silicon chips, the process is the same. All these chip manufacturers use the so-called silicon “wafers” that are cut using a special technology, then used for different uses and in different industries.

The etch technology that all these manufacturers use is called UV lithography. There are different “degrees” of slicing. The process is measured in nm. Apple, for example, will start making its next-generation silicon chips using 3 nm.

The finer the silicon “wafers” the chipmaker can cut, the faster and more efficient the processor will be. That’s why chip makers are always striving for a finer chip manufacturing process.

Where does ASML stand in all this? The UV lithography technology used by all these chip makers is proprietary to ASML. Also, the machines that chipmakers use for slicing are manufactured by ASML.

The newest technology for dicing silicon wafers is called extreme ultraviolet lithography (EUV). The Netherlands’ ASML is the only company that has the technology to build machines to produce chips with extreme ultraviolet lithography. EUV is believed to be the future of manufacturing in the sector.

There is another etch method or technology called Deep Ultraviolet Lithography or DUV, but it is an older and less efficient way.

When it comes to UV lithography, ASML still has some competition from Canon and Nikon, but even with that fact ASML holds about 62% of the market.

Although Deep Ultraviolet Lithography is an old and ineffective methodology, it is so complex that the Chinese have not yet been able to “copy” it, and it is unlikely that they will be able to copy EUV even if they somehow manage to get their hands on some from the ASML machines.

ASML sells the EUV machine for “slicing” chips for about $200 million, and all major chipmakers, including Intel, NVIDIA and TSMC, must buy these machines.

The influence the Netherlands has on the semiconductor sector

The United States only recently entered the world trade in silicon chips, or rather “pushed” into the industry by allowing TSMC and Intel to set up factories in the US with heavy subsidies and tax breaks. The reason the US wants a bigger share of the global silicon industry is China.

Western countries, especially the US, tried to impose all kinds of regulations and trade embargoes on countries like Japan and the Netherlands to prevent the Chinese from having access to the production of chips with UV lithography technology.

This is also why the US is trying to convince the Netherlands to impose sanctions on ASML themselves and stop them from dealing with China. ASML, have stopped their dealings with China and have not sold them new EUV machines, but continue to sell them old DUV machine parts.

However, the Netherlands has indicated that it will not comply with US demands to impose sanctions on China. The country’s foreign trade minister Liese Schreinemacher claims that they will hold discussions with their partners such as Japan, South Korea, Taiwan, Germany and France.

Additionally, ASML is now working on a new generation lithography machine called high-NA-EUV. It will allow chipmakers to make 2nm processors, marking a milestone in chip manufacturing.