Inside ASML, the company used by advanced chipmakers for EUV lithography
In the city of Veldhoven in the south of the Netherlands, near the border with Belgium, is the only factory capable of assembling a revolutionary machine on which the largest chipmakers in the world rely.
EUV lithography is the most expensive step in manufacturing the advanced microchips that power data centers, cars and iPhones. The machines are made by one company: Advanced Semiconductor Materials Lithography.
“ASML has a monopoly on manufacturing EUV lithography machines, the most advanced type of lithography equipment needed to make every advanced processor chip we use today,” said Chris Miller, assistant professor at the Fletcher School of Tufts University. “The machines they produce, each one is among the most complicated devices ever made.”
EUV stands for extreme ultraviolet, an incredibly short wavelength of light that ASML generates in large quantities to print small, intricate patterns on microchips. EUV light is created with tiny explosions of molten tin occurring at extreme speeds, then bouncing off unique Zeiss mirrors which, according to ASML, are the flattest surface in the world. A small percentage of EUV light particles reach the surface of a silicon wafer, where they imprint the tiny patterns that determine what each chip will do.
Demand for ASML’s EUV technology soared during a global chip shortage that resulted in backorders for products ranging from PlayStation 5 consoles to Chevrolet Malibu sedans. The company’s stock price has climbed more than 340% since the end of 2018, making ASML more valuable than some of its major customers, such as Intel.
ASML CEO Peter Wennink said the company has driven down semiconductor prices since its inception 38 years ago and will continue to do so “for the next two decades”.
“The world needs more chips,” Wennink told CNBC. “So we have to make more machines, which, by the way, will continue to drive up the average selling price as long as we can get the cost per transistor down.”
Still, Wennink says the global chip shortage is “a catch-22” for ASML.
“We got a lot of messages from our suppliers saying, ‘Hey, we might be late delivering our modules because we can’t get the chips.’ And we said, ‘If we can’t get the chips, we can’t get the machines to make more chips.'”
Wennink said ASML is still managing “but it’s a daily struggle.”
$200 million machines
ASML has sold a total of about 140 EUV systems over the past decade, each now costing up to $200 million, according to Wennink. Its next machine, called High NA, will be priced at over $300 million.
Its EUV machine is “so expensive that most companies can’t afford it,” said Joanne Itow, general manager of manufacturing at Semico Research. “It certainly eliminated a lot of players in the market,” including chipmaker GlobalFoundries, which decided a few years ago to stop working on more advanced chips due to their high cost, he said. she stated.
ASML’s EUV lithography system is needed to print all of the world’s most advanced semiconductors
Today, ASML sells the machines to just five chipmakers. The three biggest – Taiwan Semiconductor Manufacturing Co., Samsung and Intel – accounted for nearly 84% of its business in 2021. TSMC says that in 2019 it was the first to provide high-volume chips made with EUV and that ‘It has remained in the lead ever since, with chip technology at least a knot ahead of Samsung and Intel.
ASML dominance is a relatively new phenomenon. Ten years ago, the company’s ability to search for EUV was decided by major investments from Intel, Samsung and TSMC.
“We didn’t have the money,” said Wennink, who joined ASML in 1999. “So we went out and found partners, which was actually the basis of how we built the company. So we were forced to be a system architect and a system integrator.”
ASML started as a subsidiary of Dutch electronics giant Philips in 1984. It launched its first solid-state lithography machine – which had been invented in a US military laboratory in the 1950s – in a leaky hangar next to a Philips office building in Eindhoven, the Netherlands.
“The first lithography tool really looked like a projector,” said Christophe Fouquet, executive vice president of EUV at ASML. “There’s basically a reticle, which contains the image you want to project. Then there’s an optical system, which will take that image and project it onto the wafer.”
ASML developed its first lithography system in 1984, in a leaky hangar outside a Philips office building in Eindhoven, the Netherlands
By 1988 ASML had five offices in the United States with 84 employees and a new Dutch office in Veldhoven which eventually became its headquarters. CNBC had an exclusive tour of this facility in March.
“When the industry was preparing to jump into the early stages of EUV research, none of the American companies were ready to take the plunge on what would be an expensive and risky proposition, while ASML was,” said said Miller, author of the upcoming book “Chip War: The Fight for the World’s Most Critical Technology.” “ASML is a Dutch company, but it’s also a Dutch company that relies very heavily on American components, especially for its machines.”
China and a global supply chain
EUV machines are made up of multiple modules with hundreds of thousands of components, sourced from nearly 800 global suppliers. Each module is built at one of ASML’s 60 sites worldwide and then shipped to Veldhoven for assembly. After each assembled machine has been tested, it is disassembled for shipment to a chipmaker. The expedition requires 20 trucks and three fully loaded Boeing 747s.
One country where ASML will not ship its EUV technology is China.
“Forty-two countries around the world have agreed to put in place export controls because it’s so critical,” Wennink said. “So it’s not our choice, it’s the governments’ choice.”
As early as 2018, the Trump administration reportedly urged ASML not to sell EUV technology to Chinese companies.
“China wanted to get into this race,” Itow said, “but there were political reasons why China didn’t have access” to the technology.
ASML deals with China in another capacity. The company refurbishes older lithography systems, called deep ultraviolet or DUVs, and sends many of them to the world’s most populous country. Wennink said 96% of all machines ASML sells are still working.
“There is a lot of debate about whether selling additional DUV equipment to China is also a national security risk, by allowing China to increase its capacity to manufacture semiconductors close to the tip,” Miller said. “I think there is a chance that in the coming years further restrictions will be placed on ASML’s ability to also sell DUV equipment to China.”
Prior to EUV, chipmakers could purchase DUV lithography machines from three companies: ASML, Nikon, and Canon. While Nikon in Japan is still a competitor in this market, ASML is the only option for EUV. Experts say it could take any other company decades to catch up, both because of ASML’s proprietary technology and because it has intricate, often exclusive deals with hundreds of suppliers.
“We are unique to some of our customers, and some of our supplies are unique to us,” Wennink said. “And those almost symbiotic relationships, some people say, are worse than being married because you can’t get divorced.”
One of the ways ASML has hedged against supply chain risks is by buying some of its suppliers, such as Cymer in San Diego, where the EUV light source is produced. ASML also purchased Berliner Glas in 2020. Although a fire broke out at the Berlin site in January, Wennink said the damage will not significantly impact production of the system this year.
ASML forecasts 20% sales growth in 2022 and 11% annual revenue growth through the end of the decade.
Watch the video for a rare glimpse into the technology inside ASML’s cleanrooms in California and the Netherlands, to see how EUV machines use precision lasers, blast molten tin and ultra-flat surfaces to create the building blocks of our digital world.