ASML is in an enviable position. The Dutch company is the only manufacturer of equipment that can reliably etch the most advanced semiconductors, as required for everything from artificial-intelligence (AI) accelerators to smartphone chips. Even for less sophisticated processors—the types found in cars and tumble dryers—its machines account for over 90% of global sales. No rival comes close.
The firm’s dominance has not spared it from problems, however. In an attempt to thwart China’s AI ambitions, America has barred ASML from selling its most advanced equipment to Chinese companies. And demand for asml’s more basic tools has weakened, too. The firm was forced to cut its sales forecast for 2025 in October, causing its share price to drop by a fifth. Nevertheless, in a recent interview with The Economist, Christophe Fouquet, ASML’s boss, struck a bullish tone—and took aim at European policymakers.
ASML faces commercial difficulties on a number of fronts. Chinese overcapacity has produced a chip glut, lowering demand for its more basic machines elsewhere. Meanwhile, the firm’s latest and most advanced extreme-ultraviolet (EUV) machines, which cost more than $350m each, have received a mixed response from chipmakers. These systems can cram processing power into ever smaller areas, as is essential for making cutting-edge chips. Yet not all customers are convinced the precision justifies the price. According to SemiAnalysis, a research firm, similar results can be achieved using older tools, albeit with a fiddlier manufacturing process.
The market for such equipment is inherently limited. Only a handful of companies have the know-how and spending power to deploy it. Although TSMC, a Taiwanese chipmaker and ASML’s biggest customer, is pressing ahead with new American and Taiwanese plants, Intel and Samsung have recently lowered their capital spending because of financial difficulties. Still, Mr Fouquet is upbeat about ASML’s commercial prospects. He expects AI advances to prompt chipmakers to adopt the latest EUV machines.
What troubles him more is geopolitics. The pressure on ASML began to build in 2019, when the Dutch government, at America’s urging, barred the company from exporting its advanced EUV machines to China. Widening restrictions, enforced by both the American and Dutch authorities, subsequently extended to some older deep-ultraviolet machines. Even under Mr Biden the rationale for restrictions was not always clear, Mr Fouquet says. President Donald Trump’s second term brings the threat of still tighter controls, and the near-guarantee of more uncertainty. As a consequence, planning has become much more difficult for ASML.
That is why Mr Fouquet thinks that European politicians and policymakers should be doing more to help his company. With its head office on the outskirts of Eindhoven, ASML is Europe’s only firm with something approaching a monopoly in a critical industry, making it strategically important. Referring to the Dutch government’s willingness to follow America’s lead on export bans, Mr Fouquet says that Europe must “decide for itself what it wants” and “should not be dictated to by anyone else”. He would like the continent’s officials to support their world-leading companies more forcefully. And if they fail to do so, he warns, such firms may not want to remain in Europe.
In reality, things would have to get much worse for ASML to even consider leaving. The company’s extraordinarily sophisticated supply chain is largely located in Europe. And if ASML did move it would still be subject to America’s broad export controls, since it relies on technology from Cymer, a subsidiary in San Diego. Mr Fouquet’s threats nevertheless indicate the extent of his frustration.
He warns that if governments “go overboard with some decisions”, the consequences could spread far beyond any single firm. What the semiconductor industry has created together is “a miracle” that is ultimately built on a delicate “chain of trust”, featuring deep specialisation and collaboration. That is now under strain; if the chain is broken it “could put some of the things we find so extraordinary today at risk”, Mr Fouquet cautions. Maybe so. But policymakers in Europe have plenty of problems they need to deal with, and the wellbeing of asml is far down their list. ■
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