Each time you employ AI, you’re, in some small manner, relying on a 42-year-old, 44,000-person Dutch firm that spends €4.5 billion every year to advance its expertise.
ASML, headquartered within the Netherlands, makes the machines that make the chips that make AI doable. Extra particularly, it makes the one machines on the earth able to printing the microscopic patterns on silicon wafers that outline probably the most superior semiconductors — a course of referred to as excessive ultraviolet lithography, or EUV. The machines are roughly the scale of a college bus, take months to assemble, contain lots of of suppliers, and price wherever from $200 million to upwards of $400 million apiece relying on the era (costs that give even ASML’s biggest customers pause often).
That monopoly has made ASML probably the most invaluable firm in Europe, price over $530 billion. And with the 4 largest American tech firms — Microsoft, Meta, Amazon, and Google — committing greater than $600 billion in AI infrastructure spending this yr alone, demand for ASML’s machines has surged to the purpose the place the corporate has brazenly mentioned the world gained’t have sufficient chips for years.
All that demand has additionally made ASML a goal. Substrate, a San Francisco startup based by a protégé of Peter Thiel, has raised greater than $100 million and been valued at over $1 billion on the declare that it might construct a rival lithography machine. Individually, there have been stories that former ASML engineers in China have partly reverse-engineered the technology, a prospect with monumental geopolitical implications.
Christophe Fouquet, who grew to become ASML’s CEO in 2024 after greater than a decade on the firm, sat down with this editor on the rooftop deck of his Beverly Hills lodge Tuesday morning forward of his look on the Milken Institute International Convention. Wearing a blue swimsuit and white shirt, he was relaxed — even when the dialog turned to the rivals.
This interview has been calmly edited for size and readability.
Did you see the AI explosion coming?
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No, under no circumstances. We labored very onerous, however not with the concept this could come. You went from an idea — one thing folks thought would ultimately arrive — to ChatGPT, which was actually the primary good instance of what AI might do. And now I feel we have a look at AI as the following revolution, not solely industrial however societal. Did I see it coming? No. Sitting in the midst of it on daily basis, generally we get up within the morning and nonetheless verify that what is going on is actually taking place.
The large query everybody has is whether or not the availability chain can hold tempo with demand. Can it?
The demand is such that the market general can be supply-limited for fairly a bit. Proper now, the largest bottleneck appears to be in chip manufacturing. We, as an gear provider, comply with our prospects, and to this point we’ve adopted them fairly effectively — however we all know now we have to step up our complete provide chain and capability. When you discuss to the hyperscalers, I feel they may let you know that for the following two, three, even 5 years, they’re not going to get sufficient chips.
TSMC made information just lately saying your newest machines are too costly. How do you reply?
An EUV system, in case you have a look at the value, goes to be dearer than a low-NA system, however the price of making a wafer with this instrument on some superior layers can be cheaper. We will get 20%, 30% value discount.
[Editor’s note: Both machines Fouquet is referring to here are EUV machines — the same fundamental technology. NA stands for numerical aperture, a measure of how finely a machine can focus light onto a chip. Low-NA EUV is the current generation; high-NA EUV is ASML’s newest generation, capable of printing even finer patterns but carrying a price tag of $350 million or more apiece. Fouquet is arguing that even though the new machine costs more, it produces chips more cheaply.]
I get a number of questions on whether or not it’s going to be this month or subsequent month or the month after. And I normally say it doesn’t actually matter, as a result of we designed high-NA for the following 10, 20 years. You possibly can return to the press from 2016, 2017, and also you’ll discover the identical quotes — low-NA EUV was very expensive. We all know what occurred after that. The identical will occur with high-NA.
There’s a startup referred to as Substrate, backed by Peter Thiel, claiming it might construct a rival lithography machine. What do you consider it?
Desirous to have it and having it — that’s nonetheless an enormous distinction. The challenges of lithography are many. Having the ability to make a picture is a place to begin, however it’s essential to make that picture in very excessive amount, at very low value, at excessive velocity, and with nanometer accuracy. I all the time say the one motive ASML might construct an EUV machine is as a result of 80% of it already existed, based mostly on earlier information and merchandise constructed over time. We needed to remedy one drawback — getting EUV gentle — and that alone took 20 years. While you begin from scratch, the problem is gigantic. I’ve seen a number of claims. I’ve seen a couple of footage. However we had our first EUV image 30 years in the past, and we nonetheless wanted 20 extra years of onerous work to show it into a producing system.
What about xLight, a laser startup partly backed by the U.S. government that wishes to work with you?
xLight is specializing in one component of our EUV machine — the supply that creates the sunshine. The supply now we have could be prolonged for a few years to return, and we all know easy methods to scale it. What xLight is doing is a brand new supply that also must be constructed and confirmed. The one query is whether or not it gives a efficiency or value benefit over what now we have. I feel the jury continues to be out. We’re working with them to allow them to display their expertise — we really feel that’s a duty on our facet. However it’s nonetheless a really lengthy journey.
There are additionally stories that former ASML engineers in China have reverse-engineered your machines.
To reverse-engineer something, you first must have the machine. And there’s no EUV machine in China — we by no means shipped any instruments there. All of the instruments now we have shipped, we all know the place they’re. They’re both in use with prospects, and we monitor these, or they’ve been dismantled and got here again to us. The concept one among our methods is in China is solely unsuitable. And since our EUV expertise has by no means been exported there, we additionally haven’t any folks in China skilled on EUV.
Very early on, when restrictions got here in, we created a whole separation inside the firm between those that can entry EUV expertise, paperwork, and coaching, and those that can not. Our staff in China sits on the opposite facet of that line. The information level to little or no, if any, progress in any respect. It’s onerous for folks to simply accept that as a result of entry to this expertise is so vital.
On export controls extra broadly — Jensen Huang was right here final night time arguing that firms ought to promote globally, that extra company income means extra tax {dollars} for a corporation’s residence nation. He additionally mentioned the vital factor is to maintain the most effective and newest nearer to residence. Do you agree?
I feel he’s completely proper. What he provides — and I feel that is what Nvidia has finished — is that you could hold a technological benefit by sustaining a era hole in what you promote. Nvidia sells a couple of generations again, and that lets them discover the stability between nonetheless doing enterprise and never handing a powerful aggressive benefit to international locations the place you gained’t promote the newest. We imagine the identical method ought to apply to our merchandise. As we speak we ship instruments to China — allowed by export controls — however it’s a instrument we first shipped in 2015. When you apply Jensen’s philosophy to our state of affairs, Nvidia is working with roughly an eight-generation hole. We’re two or three. There’s room for rationalization — discovering the appropriate stability between not doing enterprise in any respect, dropping a serious alternative, and strongly inviting others to compete with you.
How do you assess the place issues stand with the present administration on all of this?
There’s a good dialogue, which is essential. I feel there’s a real understanding of what enterprise wants, however there’s nonetheless the problem of discovering the appropriate stability between all of the totally different voices and pursuits. The dialogue is there, and we admire that. I’ve been in Washington many occasions. At the least the dialogue is going on. However it’s a really advanced matter.
You don’t appear involved about anybody short-cutting your expertise.
Individuals prefer to have the best expertise, however they have an inclination to neglect what it took to construct it. It’s been a few years of labor — not solely at ASML however with our suppliers. Many various teams of individuals fixing very troublesome issues, after which one firm bringing all of it collectively utilizing a long time of lithography experience to show it into a producing system. That is under no circumstances simple. And I feel that’s additionally our greatest safety. It’s merely what it took to place it collectively.
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