Industrial light and magic

Comments · 41 Views

How ASML became chipmaking’s biggest economy

Gaurav Singh

gs3176@nyu.edu

 

Industrial light and magic

How ASML became chipmaking’s biggest economy

February 29, 2020

 

Summary – The article talks about the ASML a Dutch company that has cornered the critical link in the global electronics supply chain. ASML manufactures photolithographic machines which are critical in modern chipmaking. Its market share has doubled since it started operating in 2005. It is the only company that harnesses extreme ultraviolet light which allow the etching of smaller components. Its share didn’t just go up after a slump down in the industry, but its share also traded 32 times more than its forward earning. Leading chipmakers in the world such as Intel, Samsung and Taiwan semiconductors have become reliant on ASML’s technology. During the start of their venture they faced troubles with delivering on time, as they later realized working with lasers one billionth of a meter is not going to be an easy task. None of its competitors are pursuing the EUV technology that ASML utilizes. It shares Political interest from different countries too, as it could also be used by the military and as no other company pursues the EUV technology it makes them the only one in the market and hence a lot of political pressure too. Recently it had to cancel an order for a Chinese chipmaker under pressure from the American government. Without the help from ASML other competitors would take a decade to catch up. They are already working on new improved EUV machines and will be already ahead when others catch up.

Opinion – Before reading this article I wasn’t aware that there were even more companies below Intel and other such large chip manufacturing companies. After reading about ASML and its progress in its domain I was surprised. Not only is it alone its business but also ahead of its other rivals who would take a decade to catch on to them without their help. Its market value is more than that of Volkswagen, Siemens and Airbus which are in itself large corporations in its respective domain. That fact that is has already secured funding from key partners shows a great future from them. And with their monopoly in the market they have a great chance at it. But that doesn’t mean they wont face challenges, their machines weigh 180 tones which is challenge for the electronics industry’s supply chain. Other than that political interest from other countries due to its technology creates a lot of pressure too. It is important for them to get into the Chinese market too as it is a huge market one that can’t be ignored due to its sheer size. Failing to do so will be a problem too. Also, they would have to make sure that they deliver their new products on time this time not like previously when they took more than 10 years to deliver. But with past challenges faced and better insight about the technology than before chances of failing are low.

Comments