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

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

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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, international locations that have been as soon as the greatest exporters of crude oil.

The formation of OPEC allowed these international locations to primarily set the guidelines and extra importantly, costs at which crude oil might be bought to different international locations. 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 may be one organisation, or slightly, one company which has full management over the global semiconductor industry. And whereas Taiwan and China could also be the greatest chip-manufacturing international locations in the world proper now, they wouldn’t be what they’re with out licensing some important expertise and equipment from this company.

We are, in fact, speaking about ASML Holdings, a Dutch multinational company that right now, is primarily recognized for its semiconductors enterprise.

How are semiconductors and silicon chips made?
Whether you converse of TSMC, NVIDIA, Intel, AMD or some other tech big that makes its personal silicon chips, they observe the identical course of. All of those chip makers use a giant sheet of silicon known as wafers, which imagine it or not, is made utilizing a particular type of sand. Manufacturers then slice these wafers into skinny layers and smaller items that are then packaged and programmed in accordance with their use circumstances. Once that’s finished, these packages containing a silicon chip are despatched off for use in several merchandise.

The expertise that every one of those producers use to slice and minimize that piece of wafer, is named 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 known 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 minimize, 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 slightly finer chip-making course of.

But the place does ASML match into all of this? Well, the ultraviolet lithography expertise that’s used all these chipmakers is owned by ASML. Also, the equipment that chipmakers use to bodily slice and minimize 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 expertise used to slice silicon wafers into usable silicon chips or processors. Image Credit: ASML

What does ASML do?
The newest expertise to slice silicon wafers is named EUV or Extreme Ultraviolet lithography. ASML is the solely company that has the expertise 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 expertise to slice wafers, known 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 difficult that the Chinese nonetheless haven’t been capable of copy it and reverse engineer it correctly and thoughts you China has a popularity of cloning/reverse engineering a few of the most over-engineered merchandise in tech historical past. And it’s unlikely that they’ll have the ability to copy EUV or reverse engineer it anytime quickly, even when they by some means handle to get their arms 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 firms 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 cause why the US needs a bigger piece of the global silicon industry now could be due to China.

Western international locations, primarily the US has tried to impose all kinds of rules and commerce embargoes on international locations like Japan and Netherlands, primarily in order that the Chinese don’t have entry to EUV chipmaking, and by extension, the subsequent era of chips and digital {hardware}. This can also be the cause 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 rivals like Nikon and Canon, however ASML holds 62 per cent of the market. Their rivals are nonetheless utilizing the older DUV lithography course of, whereas ASML is already promoting the extra environment friendly EUV and is presently creating the next-gen High-NA-EUV course of. Image Credit: ASML

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

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

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