Home World News How one Dutch company has a stranglehold over the global chip industry

How one Dutch company has a stranglehold over the global chip industry

How one Dutch company has a stranglehold over the global chip industry


When we converse of monopolies in the financial sense, the one phrase that involves thoughts if OPEC, or the Organization of the Petroleum Exporting Countries. This is an organisation consisting established by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, nations that had been as soon as the largest exporters of crude oil.

The formation of OPEC allowed these nations to basically set the guidelines and extra importantly, costs at which crude oil shall be bought to different nations. It was, and continues to be a monopoly in the truest sense of the phrase. However, as highly effective and all-encompassing OPEC is, they don’t essentially have a stranglehold over the manufacturing and processing of crude oil.

In phrases of silicon chips, although, there’s one organisation, or relatively, one company which has full management over the global semiconductor industry. And whereas Taiwan and China could also be the largest chip-manufacturing nations in the world proper now, they wouldn’t be what they’re with out licensing some important know-how and equipment from this company.

We are, after all, speaking about ASML Holdings, a Dutch multinational company that in the present day, is primarily identified for its semiconductors enterprise.

How are semiconductors and silicon chips made?
Whether you converse of TSMC, NVIDIA, Intel, AMD or another tech large that makes its personal silicon chips, they observe the similar course of. All of those chip makers use a massive sheet of silicon referred to as wafers, which imagine it or not, is made utilizing a particular form of sand. Manufacturers then slice these wafers into skinny layers and smaller items that are then packaged and programmed based on their use circumstances. Once that’s executed, these packages containing a silicon chip are despatched off for use in several merchandise.

The know-how that each one of those producers use to slice and lower that piece of wafer, known as ultraviolet lithography. Now, there are numerous grades of lithography, which differ in how finely or thinly a wafer is sliced. In common day-to-day parlance, that is additionally referred to as course of and is measured in nm. For instance, Apple will begin making their next-generation silicon chips utilizing the 3nm course of. 

The finer the slices of the wafer that a chipmaker can lower, the quicker and extra environment friendly the processor goes to be. That is why chipmakers are at all times making an attempt to crack a decrease or relatively finer chip-making course of.

But the place does ASML match into all of this? Well, the ultraviolet lithography know-how that’s used all these chipmakers is owned by ASML. Also, the equipment that chipmakers use to bodily slice and lower the wafers, is manufactured by ASML.

The semiconductor monopoly How one Dutch company has a stranglehold over the global chip industry

ASML has a monopoly over EUV, the know-how used to slice silicon wafers into usable silicon chips or processors. Image Credit: ASML

What does ASML do?
The newest know-how to slice silicon wafers known as EUV or Extreme Ultraviolet lithography. ASML is the solely company that has the know-how for constructing chip manufacturing equipment with excessive ultraviolet lithography, and as chip producers have claimed, EUV is the way forward for slicing wafers.

There’s additionally one other methodology or know-how to slice wafers, referred to as Deep Ultraviolet Lithography, or DUV, however that’s an older and fewer environment friendly strategy to go about. When we contemplate Ultraviolet Lithography, ASML has some competitors from the likes of Canon and Nikon, however even in such a state of affairs, ASML has about 62 per cent of the market. 

Although DUV is an outdated and inefficient methodology, it’s nonetheless so sophisticated that the Chinese nonetheless haven’t been capable of copy it and reverse engineer it correctly and thoughts you China has a repute of cloning/reverse engineering a few of the most over-engineered merchandise in tech historical past. And it’s unlikely that they are going to have the ability to copy EUV or reverse engineer it anytime quickly, even when they someway handle to get their fingers on one of ASML’s machines. 

The semiconductor monopoly How one Dutch company has a stranglehold over the global chip industry

Engineers putting in one of the modules of the $200 million equipment that chipmakers purchase from ASML to slice and programme silicon wafers. Image Credit: ASML

ASML sells its EUV chip-slicing equipment for about $200 million a set, and all main chip makers, together with Intel, NVIDIA and TSMC have to purchase these machines for his or her core functionalities. Taiwan’s TSMC has a particular association with ASML due to they used to buy their equipment a lot earlier than Intel, Samsung and different main chip makers. Because of this, TSMC and corporations that used their silicon had a slight generational benefit over their rivals.

The sway that the Netherlands has over the global silicon commerce
The United States has solely just lately jumped into the global silicon commerce – it has virtually purchased its approach into the industry, by permitting TSMC and Intel to arrange factories in the US at excessive subsidies and tax breaks. The motive why the US desires a bigger piece of the global silicon industry now’s due to China.

Western nations, primarily the US has tried to impose all types of laws and commerce embargoes on nations like Japan and Netherlands, primarily in order that the Chinese don’t have entry to EUV chipmaking, and by extension, the subsequent technology of chips and digital {hardware}. This can be the motive why the US has been making an attempt to persuade the Netherlands to impose sanctions on ASML themselves and cease them from coping with China. To ASML’s credit score, they’ve paused their dealings with China, and haven’t bought them any new EUV equipment, however proceed to promote them outdated items of DUV equipment.

The semiconductor monopoly How one Dutch company has a stranglehold over the global chip industry

ASML has a couple of opponents like Nikon and Canon, however ASML holds 62 per cent of the market. Their opponents are nonetheless utilizing the older DUV lithography course of, whereas ASML is already promoting the extra environment friendly EUV and is at the moment creating the next-gen High-NA-EUV course of. Image Credit: ASML

The Dutch, nonetheless, have made it clear that they won’t bow right down to the US’ calls for of imposing a sanction on China. Liesje Schreinemacher, the Dutch Minister of Foreign Trade has maintained that they are going to lead discussions with their companions like Japan, South Korea, Taiwan, Germany and France.

Moreover, ASML is already engaged on a new technology of lithography machine referred to as high-NA-EUV. High-NA-EUV will permit chipmakers to make 2nm processors, which is able to mark a main milestone in chip manufacturing.

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