The ASML situation couldn’t be more exciting and more complicated at the same time. This may not sound familiar to you even though we tell you its acronym stands for Advanced Semiconductor Materials Lithography. It must therefore be said that it is a Dutch company in the crosshairs of the United States and China. And not precisely because of bad practices, quite the contrary.
ASML It has a technology that is unique in the world and of vital importance for mobile telephony.. Specifically for a machine capable of making machines, which sounds comical, but is vitally important. The machines they produce are responsible for manufacturing the most advanced microprocessors in the world. And this is exactly what worries the Americans and the Chinese.
ASML, a European pioneer in the midst of a trade war
The trade war between the United States and China is not new. We’ll continue to witness chapters of their battles for years to come, and in the meantime, ASML is one of those in between. It was founded in 1984 and is headquartered in Veldhoven, a town of less than 50,000 inhabitants located in the south of the Netherlands.
Although major American technology companies have their factories and parts suppliers in countries like China, Taiwan, Japan or South Korea, ASML is a unique case because it is literally located in the middle of the two great powers ( United States and China). . A situation in which they also find themselves metaphorically speaking.
ASML has at its headquarters this “machine capable of making machines” (Mariano Rajoy will like this expression) and which no other company has, whether in the United States, China or any other territory. The Dutch have the machines and patents necessary to make making chips with extreme ultraviolet technology.
This other concept may also seem strange to you. It’s too complex to explain in a simple article like this, but to understand it, it’s a chip printing technique (lithography) that allows them to be much faster and more energy efficient. All this thanks, among other things, to impeccable production in which practically no dust or the like remains like a simple fingerprint.
The BBC gained access to the factory and reported how closely the machine in question is guarded and how workers have to wear specialist suits and even double layers of gloves. All this with the aim that, when handling the machine, not a single trace of dirt or any other element enters that could worsen the manufacturing process.
US sanctions against China put ASML under control
At the end of 2023, ASML closed the year with growth of 25% compared to what was obtained in 2022 and its revenues are around 8 billion dollars. In the last quarter, almost half of its revenue (46%) came from Chinese customers. Yet, ASML has a good foundation for business growth in China.
It is said that the United States wants to avoid at all costs China’s technological advances in the field of microchips and therefore the famous sanctions imposed on China, which began last November and threaten to cause it to lose 15% of its profits . at ASML. And all this despite the fact that the company is working to quickly ship its lithography equipment before all sanctions take effect in full.
This being the case, and as the Dutch government rejected the export license, ASML shares fell 2.5% at the opening of the stock market activity of this new year. However, some sources point to a possible agreement between the governments of the United States and the Netherlands so that ASML can continue to export, although no details have been disclosed on this subject.
If China is not a business, perhaps South Korea and the United States itself can.
Among Samsung’s many business lines around the world, microchip manufacturing stands out, being one of the largest in the world and based in South Korea. ASML has entered into an agreement precisely with this company. The two companies will invest $760 million to build an advanced microchip factory in South Korea.
This is an agreement that was revealed to the media last month and which, in a way, serves to give oxygen to ASML and allow them to continue their activity. We already knew that ASML did not develop alone and had important partners throughout its journey, but the Netherlands-South Korea alliance is probably one of those that raises the greatest expectations for the Dutch.
Likewise, there is a glimmer of hope with the United States. Even if it is he who puts obstacles in their business with China, it is also the country which welcomes Intela company with which ASML also has an agreement to bring machines to its factory located in Hillsboro, a city located in northwest Oregon (United States).
And what does Apple have to do with all this? Well, a lot
Directly, Apple and ASML have no ongoing activity. No, unless they are known and in a manner similar to the agreement concluded by the Dutch company with Samsung. However, Indirectly, Apple could benefit from extreme ultraviolet technology ASML.
TSMC will receive the machines from ASML throughout this year and is expected to begin in 2025 when they will launch with large-scale production of photolithography equipment. Be TSCM the Apple chip supplierthis means that the Californian company could enter into negotiations for the manufacture and supply of these advanced processors.
Obviously, It will not be something palpable in the short and medium term. Especially since on the other hand, the race to 2 nanometers is progressing, followed by another manufacturing process. However, this puts a future on the table for taking the next big step in iPhone chips.
Cover image | Álvaro García M. with DALL-E 3
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