The biggest company in Europe you’ve probably never heard of
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ASML NXT1970Ci photolithography machines are assembled at the ASML Holdings NV factory, Veldhoven.
Jasper Juinen | Bloomberg | Getty Images
ASML (Dutch-based tech company) has a small market capital of about $350 million. It’s an unrecognized technology giant that is set to continue growing with insatiable consumer demand for semiconductors.
This 37-year-old firm, with more than 28,000 employees, is the only one in the world that can make the complex machines required to produce the highest-quality chips.
Each machine costs approximately $140million and emits extremely narrow beams of light on silicon wafers which have been processed with “photoresistant” chemicals. The wafers where light is in contact with chemicals create intricate patterns. These are meticulously planned beforehand.
The process of forming the transistors is called lithography. They are known as ultraviolet lithography machines (or EUV machines).
ASML sells rare EUV machines only to select chip-making titans, such as TSMC, SamsungAnd Intel. It is said that each machine contains more than 100,000 components. Each container can hold 40 cargo containers and four jumbo jets. ASML only sold 31 such large pieces of equipment in the last fiscal year.
The Trump administration had even forced the Dutch government into stopping the sale to Chinese buyers of the machine, Reuters reports. reported last year. Chinese chipmakers were unable make advanced chips because of this. Trump’s position has been unaffected by Biden’s administration.
Chris Miller is an assistant professor at Tufts University’s Fletcher School of Law and Diplomacy. He explained to CNBC that the chipmakers seek the narrowest wavelength of light in lithography, so they can place more transistors on each silicon piece.
The basic building block of modern electronics is the transistor. Transistors allow for an electric current flow through a circuit. The more transistors that you fit on a chip the better it will perform.
Miller said that the EUV light ASML uses to create the most intricate shapes on silicon has a wavelength 13.5 nanometers. He is currently writing a book on the history and development of the semiconductor industry.
The newest TSMC chip AppleMiller explained that iPhones are made from around 10 million transistors.
There are many manufacturing steps that need to be done before shipping a chip. Miller explained that you are trying to build structures using silicon. This involves a mixture of carving out things and applying new chemicals.
Mirrors and lasers
ASML holds the exclusive right to make EUV machine suitable for mass manufacture.
“ASML is absolutely critical to the entire semiconductor ecosystem,” Peter Hanbury, a semiconductor analyst at Bain & Co, told CNBC. In some ways, it is just as crucial as TSMC.
He said that every bleeding-edge chip starting at 5 nanometers and continuing for probably a long time will be heavily dependent on ASML equipment.
Semiconductor analysts estimate that another company would need to spend around 10 years and billions to reach a point where they can compete with ASML.
Miller stated that ASML had approximately 4,000 suppliers and that their suppliers also have suppliers.
Some key parts of ASML’s EUV machines can be particularly challenging to create.
For example, the mirrors are created by Zeiss of Germany in collaboration with ASML. They’re amongst the most flat structures that humans have made.
Miller described the structures as “miracles of engineering”. They are more reflective than normal mirrors. This is because the chipmakers do not want any photons to escape before they reach their wafers.
However, the most difficult part of an EUV machine is to create the light source. This has been improved over time. They have been used historically. [chipmakers]Miller stated that he had used light bulbs in the 70s and 60s. The light bulbs are not capable of emitting extreme ultraviolet light, so it is difficult to obtain enough power. [or]Plenty of photons were emitted.”
ASML’s EUV device emits small balls of tin measuring 30 microns in diameter. These tiny particles are then blasted twice with the most powerful carbon dioxide lasers around. Miller stated that the first blast “gets” it prepared, while Miller explained that the second stronger pulse transforms it into plasma with a temperature of 400,000 Fahrenheit.
Miller stated that “this plasma of exploded Tin, if I may, emits photons in the extreme ultraviolet light.” This process took over 30 years to complete.
ASML’s EUV equipment is primarily manufactured in the Netherlands. Some equipment is also made in Connecticut.
Miller stated that it was an extremely difficult task to ship the machines. The machines can be complicated and require a great deal of training to make them work. These machines are not something you can just plug in and turn on. It is important to have the ability to teach staff how to operate them.
Miller stated that ASML staff is based in the chip findries, where machines are deployed. Miller also said that the EUV machines are constantly being monitored and adjusted by them. Only a few dozen of these machines are currently in service worldwide. The machines are still being mastered.
Upcoming sales boom?
As chipmakers try to increase their profits, demand for ASML’s EUV machine is on the rise. overcome a global crunch.
September ASML said it expects a sales boom over the next decade. The company predicts that annual revenues will reach between 24-30 Billion Euros by 2025 and gross margins of 54% to 56%. This prediction is much higher than what it previously predicted for the range of 15-24 miliarde euro.
According to the company, “We see significant growth opportunities past 2025,” and that its annual revenue growth rate will average around 11% between 2020-2030 are some of the reasons it stated.
ASML said that the “global megatrends of the electronic industry”, coupled with a “highly profitable and fiercely innovative ecosystem” will continue to propel growth throughout the semiconductor market which is currently facing a shortage.
The company stated that the demand for its products is driven by growth in the semiconductor market and an “increasingly intense lithography.”
ASML’s shares on Amsterdam’s stock exchange have increased by 772 Euros in 12 months. This is a significant increase from the 350-euro mark on Oct. 19th. On Friday, ASML shares were at an all-time high.
This October: two tech investors, Ian Hogarth and Nathan Benaich, predictedASML will be a 500 billion-dollar company by 2022.
This trend is a sign that people are looking for alpha in their investments, with semiconductors becoming more important to the global supply chain. [ASML]It feels obvious,” Ian Hogarth, angel investor, told CNBC.
Miller stated that there are many reasons for ASML to continue growing.
He said that EUV is still in its early stages and added that EUV machines were only used for high-volume production in the past few years.
Miller says that although they have been instrumental in the creation of hundreds of millions of chips over this time, most ASML customers who are key to ASML are just starting to use EUV seriously.
ASML won’t be content with its achievements. ASML plans to launch a new generation of machines called High-NA (which stands for high numerical aperture) in 2025.
Miller explained that the new High-NA machine will permit for more detailed etchings.
Miller stated that unless you believe that computing power demand is going to decline or stagnate, it doesn’t seem safe from mine. He said that ASML revenue should continue growing.
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