Long read: The world’s most complex machine

Neil Hacker begins with a primer on semiconductor chip making and the role of lithography in it before going on to geek out on the fascinating process of EUV.

“ASML makes the only machines in the world capable of stenciling the transistors onto chips with the precision necessary to fit billions on a 30-centimeter wafer.

These machines are roughly the size of double-decker buses. To ship one requires 40 freight containers, three cargo planes, and 20 trucks. They are the world’s most complex objects. Each contains over one hundred thousand components, all of which have to be perfectly calibrated for the machine to produce light consistently at the right wavelength.

…Over time, the semiconductor manufacturing ecosystem has developed increasingly sophisticated etching using ever smaller wavelengths of light. Smaller wavelengths diffract less, allowing the light to travel in straighter lines and print sharper, tinier details without blurring. These allow for more precise pattern projections that, in turn, allow smaller and more densely packed transistors.

…The most advanced version of this technology, extreme ultraviolet lithography, is used to make the very smallest chips. The smallest in 2025 were marketed as three nanometers, roughly 25,000 times thinner than a human hair. “

We’ll let the nerds among you enjoy that section on the science of EUV in its entirety. But what is also fascinating is the company’s origins – the struggles, the partnerships and the good fortune that got it here. ASML originally stood for Advanced Semiconductor Materials Lithography and was spun out of Philips, the then global giant in electronics, in 1984.

“The company took an unusual approach from the outset. While Japanese giants Nikon and Canon were vertically integrated, ASML outsourced key components like optics and motors so that it could focus on assembling and optimizing the final machine. Given this outsourcing, it made sense for ASML to embrace a modular design with clearly defined subsystems.”

Whilst it was on the verge of collapse, this modular approach eventually helped build competitiveness. “While Nikon’s contemporary photolithography system was more precise, ASML’s modular design meant that machines could be fixed quickly on site. This reduced downtime and, by making it easy to replace parts when they broke, it was possible to extend the machine’s life. This was a key factor that led John Kelly, IBM’s director of semiconductor R&D, to push IBM to order the PAS 5500 over the Japanese machines.”

Yet its eventual dominance was thanks to its partnerships. First with the American initiative on EUV led by Intel, the then global leader in chips, which also kept the Japanese out of the collaboration. “ASML [not being American] was allowed to participate so long as it committed to establish a research center in the US and source 55 percent of components for the systems sold in the US from American suppliers. In practice, this commitment was never enforced. Its Japanese competitors were never allowed to join, due to widespread fear in the US of Japanese competition.”

Second, its tie ups with its suppliers often with equity stakes as well as customers – most notably Taiwan’s TSMC, the global leader in chip making today. “Founded in 1987, TSMC’s history had been intertwined with ASML’s since its birth: Philips, ASML’s former parent, owned a 27.5 percent stake in it. Seeing ASML’s machinery exhibited at IMEC was what led TSMC to partner with ASML in EUV development.” 

Whilst its initial help came from Intel, an American company and now close ties with Asian TSMC, most of its supply chain is still in Europe: “Since almost all of the parts in ASML’s machines are made by other companies, it has become master of a sprawling supply chain of over five thousand companies. It has diversified its suppliers over the years in a very deliberate way: 80 percent of its spending goes to companies across Europe and the Middle East (notably not the US, despite prior agreements), which reduces the risk of potential export restrictions, tariffs, and other geopolitical risks that may face critical suppliers based in the US or Asia…. While most of its components come from a large number of small suppliers, ASML has formed deep bonds with its biggest suppliers. It acquired a 24.9 percent stake in optics manufacturer Zeiss.” 

Yet, EUV took almost 20yrs from inception and several billion dollars of R&D spend to find commercial success, in only as recently as 2018: “In 2012, ASML, still reeling from the global financial crisis, was struggling to continue financing its EUV efforts. In a drastic move – part desperate attempt to keep the company’s research efforts afloat and part strategic bet to win the EUV market once and for all – the ASML leadership launched a co-investment program that sold 23 percent of the company to its three largest customers: Intel, TSMC and Samsung.”  

Especially, its partnership with TSMC which in turn was chosen by Apple to make its chips accelerated the adoption of EUV.

The author ends with another key success factor of ASML – its talent and hence why the Chinese may struggle to see success with EUV: “Retaining the best workers is especially crucial in an area like photolithography, where a huge amount of tacit knowledge is used to assemble its machines. An ASML engineer once told He Rongming, the founder of Shanghai Micro Electronics Equipment, one of China’s top ASML competitors, that the company wouldn’t be able to replicate ASML’s products even if it had the blueprints. He suggested that ASML’s products reflected ‘decades, if not centuries’ of knowledge and experience. ASML’s Chinese competitors have systematically attempted to hire former ASML engineers, and there is at least one documented case of a former ASML employee unlawfully handing over proprietary information. But none of this appears to have narrowed the gap.”