ASML: The Silent Monopoly Dominating Advanced Chip Manufacturing

What happened?

ASML, the Dutch company founded in 1984 as a joint venture between Philips and ASM International, has become the world's sole supplier of extreme ultraviolet (EUV) lithography machines, essential for manufacturing the most advanced chips—below 7 nanometers. No other manufacturer, not Nikon or Canon, has managed to replicate its technology. According to Xataka, "there is no second supplier. There is no Plan B." If ASML stopped selling, the frontier of the semiconductor industry would simply come to a halt.

Why is it important?

ASML's monopoly is not a matter of chance but the result of an open collaboration strategy that its Japanese rivals never adopted. While Nikon and Canon bet on vertical integration, ASML built a network of shared innovation with clients like Intel, Samsung, and TSMC, and with suppliers like Zeiss (optics) and Cymer (light source). This ecosystem philosophy allowed it to overcome the enormous technical and economic challenges of EUV lithography, which required decades of R&D and billions in investment.

Today, ASML controls 100% of the EUV machine market and over 90% of the immersion lithography (DUV) market, the previous technology. Each machine costs between $150 and $400 million, and production is limited: in 2023, it delivered only 42 EUV systems. This makes ASML the absolute bottleneck in the advanced chip supply chain.

Strategic and geopolitical consequences

Global dependence on ASML has profound geopolitical implications. The United States, the Netherlands, and Japan have imposed export restrictions on EUV machines to China, limiting its ability to manufacture advanced chips. This has accelerated Chinese efforts to develop their own lithography, though experts believe they are years behind.

Moreover, the concentration of power in a single company poses risks: a natural disaster, a cyberattack, or a political decision in the Netherlands could paralyze global chip production. The European Union and the United States have begun promoting the relocation of chip manufacturing (EU Chips Act, US CHIPS Act), but no initiative envisions creating a competitor for ASML in the short term.

What should readers know?

• ASML has no real competition in EUV lithography. Nikon and Canon withdrew from that race due to high costs and technical complexity.
• Its technology is the result of open collaboration with clients and suppliers, a model its rivals did not replicate.
• The monopoly is strategic and lies at the center of trade tensions between the West and China.
• Dependence is a systemic risk for the global economy, as without ASML, there are no advanced chips.
• The company is publicly traded and is one of the most valuable in Europe, with a market capitalization exceeding $300 billion.

Historical context

In the 1990s, ASML was on the verge of bankruptcy. Philips withdrew its support, and the company survived thanks to an internal bailout. From then on, it adopted a model of open innovation: it invited its clients to invest in R&D in exchange for priority access to the machines. Thus, Intel, Samsung, and TSMC became shareholders and co-creators of EUV technology. This model contrasts with the closed approach of Nikon and Canon, which tried to develop everything internally and failed.

"ASML could never afford to be a closed, self-sufficient company. It had to learn to negotiate, assemble, and convince to survive," notes Xataka.

Future outlook

ASML is already working on the next generation of high numerical aperture (High-NA) EUV machines, which will allow further reduction of transistor sizes. First deliveries are expected in 2025. Meanwhile, the company continues to expand its production capacity, but demand far exceeds supply. The question everyone asks is: can such a monopoly sustain itself indefinitely? History suggests that technology monopolies tend to be challenged sooner or later, but in this case, the barriers to entry are so high that it seems unlikely in the short term.