ASML Aims for Hyper-NA EUV, Shrinking Chip Limits

If I were a G7 leader, the state of global semiconductor production would make me very nervous.

ASML is a Dutch company and is essentially a monopoly now that they first commercialized EUV lithography. They can essentially decide what companies live and die.

TSMC is probably ASML's largest customer because it reportedly produces over half of the world's chips. It is a Taiwanese company (and Taiwan accounts for two-thirds of global chip production). There is Intel too but TSMC have been way more successful in commercial chip fabrication in recent years.

TSMC is of course in Taiwan, which is way more politically precarious than Western Europe. A major disruption to Taiwan's production could be absolutely devastating. This is probably why the US is pursuing domestic chip fabrication (eg in Ohio with the CHIPS Act).

But having two companies with this much potential market influence has to make a lot of people very nervous.

These observations while good are probably old news (about a decade old) by now.

The US has viewed tech as strategic and a realm of competition with China since at least the late Obama admin (so 2015 or so).

Semicon as a key strategic goal for China is regularly mentioned in their 5 year plans in an extremely public way.

The US has leaned heavily on ASML to go along with export restrictions against China, along with a wide array of restrictions for e.g. leading edge GPUs and even CPUs. These restrictions have ramped up recently but they’ve been in place for years now.

Not only does this situation make policymakers nervous but they’ve been taking action. It's funny that the public has finally started noticing.

You are making the situation sound much less precarious than it is. The reality is that the US has only really done something in the last few years, and those changes and attempts to hedge will take a very long time to materialize.

Odds are the US and Europe will never enjoy the comparative advantage Taiwan has in the semiconductor supply chain.

What does that mean? One of the west’s key strategic advantages is the ability to lead in frontier compute technologies. China, in addition to rapidly working its way up the value chain and nodes, can easily mitigate much of this advantage if it deems the calculus worthwhile. It need only disrupt Taiwan and basically all leading edge fab capacity is off the table. Outside of the work Intel is doing, the US does not have leading edge fabs.

We do not have the skilled workforce or supply chain to take advantage of leading edge fabs.

Why is this situation with Taiwan so difficult to unwind? In the West there is a fantasy that if war breaks out, we will just load all the Taiwanese onto a starship and bring them over to the US where they will happily resume their work in OUR fabs. But they don’t want that. They want their home and ideals to be defended, and they’re willing to do the work… from their soil.

The reality is the fabs are bargaining chip with the West, far better than any iron dome. The question becomes, how did we get in this position? And the answer is deliberately. The US saw putting semiconductor production in Taiwan and a way to reduce cost and challenge the Japanese, but also a way to imbed incentives into our foreign policy for protection of tenuous Taiwanese democracy and independence.

We have known this for a very very long time.

I’m not sure Intel and Samsung are behind TSMC to the extent that switching to their CPUs would be, like, catastrophic. There’s a big advantage to using the newest node because people who buy iPhone want to be assured that their iPhones were made using the best, newest tech. But a 2 year old iPhone is not totally junk, it actually is still a much more powerful computer than almost anybody really needs.

TSMC has huge value, their R&D is hugely important. But if they vanished overnight, your G7 nation wouldn’t start to starve or anything.

> I’m not sure Intel and Samsung are behind TSMC

Intel is trying to catch up but Samsung just has no idea. Samsung spent years poaching, merging and sniffing trade secrets to survive.

Problem with Intel is that most of it is Intel specific (still)