You’ve probably never heard of this technology company. But without it, the worldwide technology industry would revert by at least a couple of decades. No other company anywhere can do what it does.
We can perhaps imagine a world without Google or Amazon or Apple or Microsoft – after all, there are alternatives to each. But we would not have a tech industry at all today without ASML (Advanced Semiconductor Materials Lithography).
The intricate patterns of transistors on the surface of semiconductor are laid out using a process called photo-lithography. First, a glass stencil mask is made from a pattern. Then, in an upside down microscope, light is shone through the mask and a series of lenses.
The resulting tiny image is focused onto the surface of a silicon wafer coated with a light-sensitive polymer. Regions in the mask shadow remain protected, but those exposed to the light can be washed away. The process is repeated, with multiple masks, each exquisitely aligned. The transistor patterns are thus traced onto the silicon, albeit at miniscule dimensions.
A human hair is typically about 0.06mm in diameter. The four-nanometre patterns used in the Apple A16 processor, at the heart of the “Pro” models of its iPhones, are hence about 15,000 times thinner. A single A16 chip in an iPhone contains about 16 billion transistors. If each transistor was enlarged to a single grain of sand, then 16 billion of them would occupy 2,000 litres – the size of a large domestic fuel tank.
Tiny dimensions
ASML is the sole supplier of lithographic equipment capable of tracing patterns at such extraordinarily tiny dimensions. Its products are used by all the major chip-manufacturing companies worldwide, including TSMC (Taiwan), Samsung (South Korea) and Intel (USA). Each of ASML’s high-end products has about 100,000 parts and requires 40 shipping containers to transport.
ASML is headquartered in Veldhoven, a 90-minute drive south of Amsterdam. It had €18.5 billion in revenue in 2021, and is expected to report about €21 billion for 2022. Its market valuation is about €227 billion today, placing it in the top 30 most valuable companies worldwide.
How did this European company come to dominate global technology?
The original work was led by Herman van Heek, a researcher at Philips Laboratories in Eindhoven in 1971. He created a prototype machine which repeatedly stepped a reverse-magnified photomask above the surface of a silicon wafer, enabling high-precision etching.
However it was relatively slow, and competitive 1:1 systems (thus, without reverse-magnification) were preferred by the industry at large. A faster prototype was then developed.
Philips wanted to use the technology, but thought it too expensive in low volumes. It decided to try and bring the machine to the market, but wanted a partner experienced in the global chip manufacturing industry. Many intense but fruitless discussions with various potential American partners followed.
The solution was a small Dutch company just 10 minutes down the road from Eindhoven. Advanced Semiconductor Materials International (ASMI) was a distributor of various semiconductor tooling products.
Extreme ultra-violet
Its entrepreneurial chief executive, Arthur del Prado, was seeking partnership opportunities but it took a full year to convince the Philips board of directors. In 1984, ASML started as a joint venture between Philips and ASMI, in a temporary shed.
The small company initially struggled against better-known American suppliers. Then, in 1988, a global downturn in the technology sector resulted in ASMI selling its ASML shares back to Philips. Philips was also reducing its costs and laying off staff, but Philips board member Henk Bodt nevertheless persuaded his colleagues to provide one last refinancing to ASML.
Within a year, ASML produced its PAS 5500 product, groundbreaking in lithographic resolution and productivity. The company turned profitable and, in 1995, launched an IPO on the Euronext in Amsterdam and Nasdaq in New York. Philips sold half of its holding at the IPO, and the remainder of its holding over the next few years.
While the first lithographic machines used visible light for etching, ultra-violet light was later adopted because it enabled finer traces on silicon. The next advance was to have been extreme ultra-violet (EUV). Because EUV is absorbed by both glass and air, any EUV machine would have to operate with a vacuum and avoid using glass lenses.
It seemed impossible, and ASML competitors Canon and Nikon gave up trying. In 2018 – and after two decades of research – ASML became the sole and world leader in EUV lithography. Philips may rue its divestment: today ASML is about 15 times more valuable than Philips.
What lies ahead? Last week, the New York Times noted that the US remobilisation of its domestic chip industry represents the country’s biggest investment in manufacturing since the second World War. Since the Trump and Biden administrations greatly restricted export of American high technology to China, China is scrambling to build its own indigenous chip industry. ASML is in a highly significant global position and its continuing R&D may well advance its leadership position.
