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ASML became the chokepoint for cutting-edge chips

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Re: ASML became the chokepoint for cutting-edge chips

#151

Post by rgalate »

quanto wrote: post #133

I have an interesting discussion with a senior colleague: why ASML? why are they by far the best? Their competitors are a few generations behind. The colleague claimed that there is no special magic. It's not that ASML is using some otherwise unknown laws of physics nor is any single step or component particularly special or novel. It's just that they meticulously optimized each step, and the sum of such steps is the…

The best explanation as to why ASML is so dominant is that they have locked out the best suppliers by signing exclusivity deals with them. If you want to compete with ASML you have to vertically build: the best lenses, the best lasers, the best metrology. A new entrant would need to replace ten different world-class vendors simultaneously. Unlike common business wisdom that dictates having multiple suppliers to mitigate risk, ASML succeeds by identifying the best supplier in the world for each critical component—such as Zeiss for optics or their specific metrology group—and securing exclusive, multi-year deals with them.

Dan Gelbart gives exactly this view in a podcast he took part: https://youtu.be/UTgrWmOk4q8?si=Zp13SPqN_Vx-kFlq&t=1564

Re: ASML became the chokepoint for cutting-edge chips

#153

Post by GuB-42 »

robotresearcher wrote: post #122
pwndByDeath wrote: post #119

Earlier quoted context omitted.

In a vehicle, all the parts are moving

I’m gonna go with the conventional frame of reference: parts moving with respect to each other. Otherwise we might as well say the ASML machine is in orbit around the galactic center.

There are situations where vehicles have a lot of parts moving with respect to each other, especially rockets.

Re: ASML became the chokepoint for cutting-edge chips

#154

Post by RobotToaster »

rgalate wrote: post #151
quanto wrote: post #133

I have an interesting discussion with a senior colleague: why ASML? why are they by far the best? Their competitors are a few generations behind. The colleague claimed that there is no special magic. It's not that ASML is using some otherwise unknown laws of physics nor is any single step or component particularly special or novel. It's just that they meticulously optimized each step, and the sum of such steps is the…

The best explanation as to why ASML is so dominant is that they have locked out the best suppliers by signing exclusivity deals with them. If you want to compete with ASML you have to vertically build: the best lenses, the best lasers, the best metrology. A new entrant would need to replace ten different world-class vendors simultaneously. Unlike common business wisdom that dictates having multiple suppliers to mitig…

Isn't that commonly called anti-competitive practices?

Re: ASML became the chokepoint for cutting-edge chips

#155

Post by CamperBob2 »

bobbruno wrote: post #144
random3 wrote: post #141

Earlier quoted context omitted.

Veritasium has a nice video about it https://www.youtube.com/watch?v=MiUHjLxm3V0 Obviously, there are a lot of reasons why. But it boils down to having the vision, the belief and the strength to follow through over many years. It's important to not confound vision with random Kool-Aid. Instead it's grounded in research. That research is itself grounded in a strong vision and belief — it got laughed by the entire phys…

One could argue that NVidia's advantage comes from a similar vision epiphany that led to them developing CUDA years before it was viable. The result is similar.

I'm tempted to call that pure luck. As far as they knew, crypto would be the killer app.

However, if you start with the assumption that at some point, people are going to need a lot of fast parallel compute for something, you could rationally justify their long-term strategy. They skated where the proverbial puck was going. They couldn't see the puck, but they were pretty sure there was one. In hindsight that really does look like a safe bet.

Re: ASML became the chokepoint for cutting-edge chips

#156

Post by Therenas »

kens wrote: post #82

Is the ASML machine actually the world's most complex machine under some metric, or is this a claim that someone made up? I.e., did someone actually compare the ASML machine to the Space Shuttle, LHC, Internet, and so forth and show that it is more complex under some definition? (I've done various historical questions, so I'm sensitive to how statements are sourced.) An orthogonal question is what makes sense as a me…

I‘d probably call it the most complex commercially available machine. You can‘t buy a Space Shuttle, or an LHC. You can buy a TSMC lithography machine, and it‘ll be delivered to you in much the same way as other equipment.

Also, I think the axis it‘s probably most complex on is precision of individual parts and of their combination. Arguably chips themselves are more precise as their 'parts' are so small, but they are much more homogeneous compared to the EUV machine, where tons of different materials and part sizes need to combine.

Re: ASML became the chokepoint for cutting-edge chips

#157

Post by momoschili »

RobotToaster wrote: post #154
rgalate wrote: post #151

Earlier quoted context omitted.

The best explanation as to why ASML is so dominant is that they have locked out the best suppliers by signing exclusivity deals with them. If you want to compete with ASML you have to vertically build: the best lenses, the best lasers, the best metrology. A new entrant would need to replace ten different world-class vendors simultaneously. Unlike common business wisdom that dictates having multiple suppliers to mitig…

Isn't that commonly called anti-competitive practices?

yes, but it has been given the blessing by the western governments.

Re: ASML became the chokepoint for cutting-edge chips

#158

Post by varispeed »

rgalate wrote: post #151
quanto wrote: post #133

I have an interesting discussion with a senior colleague: why ASML? why are they by far the best? Their competitors are a few generations behind. The colleague claimed that there is no special magic. It's not that ASML is using some otherwise unknown laws of physics nor is any single step or component particularly special or novel. It's just that they meticulously optimized each step, and the sum of such steps is the…

The best explanation as to why ASML is so dominant is that they have locked out the best suppliers by signing exclusivity deals with them. If you want to compete with ASML you have to vertically build: the best lenses, the best lasers, the best metrology. A new entrant would need to replace ten different world-class vendors simultaneously. Unlike common business wisdom that dictates having multiple suppliers to mitig…

> best suppliers by signing exclusivity deals with them

In the UK, if you are a supplier and lock in an exclusivity deal, and also you are small business, they don't treat you as legitimate business and company revenue gets taxed as employment income (IR35).

I wonder why regulators don't look into that. If they have exclusive deal, are they really in business or is it just some sort of tax structure masqueraded as supply chain?

Re: ASML became the chokepoint for cutting-edge chips

#159

Post by IshKebab »

quanto wrote: post #133

I have an interesting discussion with a senior colleague: why ASML? why are they by far the best? Their competitors are a few generations behind. The colleague claimed that there is no special magic. It's not that ASML is using some otherwise unknown laws of physics nor is any single step or component particularly special or novel. It's just that they meticulously optimized each step, and the sum of such steps is the…

Which hedgefund?

Re: ASML became the chokepoint for cutting-edge chips

#160

Post by CGMthrowaway »

RobotToaster wrote: post #154
rgalate wrote: post #151

Earlier quoted context omitted.

The best explanation as to why ASML is so dominant is that they have locked out the best suppliers by signing exclusivity deals with them. If you want to compete with ASML you have to vertically build: the best lenses, the best lasers, the best metrology. A new entrant would need to replace ten different world-class vendors simultaneously. Unlike common business wisdom that dictates having multiple suppliers to mitig…

Isn't that commonly called anti-competitive practices?

It would fall under the category of exclusive dealing.(1) Exclusive dealing is never per se illegal, but it can be as a matter of judgment before a court.

ASML would argue that it's legitimately justified because

  a) there is mutual coinvestment (ASML owns 25% of Zeiss semi optics division) and thus there is symbiosis / shared risk not a simple exclusionary supply contract
  b) no viable alternative customers exist for Zeiss so it doesn't matter
  c) EUV litho is so tightly coupled to optics that having a single supplier is a technical necessity
  d) the market was CREATED through innovation and investment across ASML and suppliers, rather than exclusionary conduct (cf. the difference between "a monopoly" and "monopolization")
The affordance of a monopoly also prevents free riding. ASML and Zeiss spent billions of dollars and decades co-developing very specific, custom-tailored technology. If a competitor could simply walk up to Zeiss and buy the lenses that ASML spent billions helping to develop, the competitor would be free riding on ASML's investment - and creating a chilling effect for future innovation.

(1) https://en.wikipedia.org/wiki/Exclusive_dealing

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