How ASML became Europe’s most valuable tech firm

From the outside it looks like an ordinary company building, lots of glass and steel, but this factory in the south of the Netherlands belongs to ASML and the machines they produce are anything but ordinary.

In fact, the technology is so advanced and so in demand that ASML has become Europe’s most valuable technology company.

So what is made there?

ASML designs and makes the machines that make computer chips – but not old computer chips.

ASML machines make the most advanced computer chips and it is the only company in the world with this kind of technology.

This effective monopoly means that the very workings of ASML’s engines are protected by some of the world’s tightest corporate security.

Nonetheless, we got a factory tour and were guided through the basics.

Microchips are made by building complex patterns of transistors, or miniature electrical switches, layer by layer on a silicon wafer.

They are printed using a lithographic system that projects light through a blueprint of the pattern of these miniature switches.

The light is then shrunk and focused using advanced optics, and the pattern is etched onto a photosensitive silicon wafer.

This pattern forms the circuitry of a silicon chip that could end up in a computer, phone, or any other electrical device you might want to mention.

The key aspect of ASML’s most advanced machines is that they can work on tiny scales, producing superfine extreme ultraviolet light – just 13.5 nanometers.

ASML’s Sander Hofman compares it to using pens with different nibs: “Because of the small wavelength, it means you’re basically using a fine liner to draw those integrated circuit lines — instead of older generation machines that might have a marker pen use. “

The ability to etch the silicon with such fine circuitry means you can cram more components onto the silicon, which in turn means electronic devices can have more processing power and more memory for the same size.

The machines work in a vacuum because the entire process of etching a chip can be derailed by the smallest contaminant – like a broken piece of skin.

Engineer Bram Matthijssen was putting together one of ASML’s latest designs when we visited the factory. Mr. Matthijssen works in one of the cleanest environments in the world.

“There are moments when we have to wear gloves over gloves to make sure we don’t leave fingerprints, to make sure we don’t bring extra dust into the machine.

“A single fingerprint… can do significant damage to the machine,” he says.

The machines themselves are very large and complex. It can take a year to assemble and deliver an extreme ultraviolet (EUV) machine.

Last year, the company delivered just 50 of its top-spec models, for a total of 400 machines.

Those sales, plus revenue from managing and upgrading existing machines, brought the company 21.2 billion euros ($22.7 billion; £18.9 billion) last year.

The orders they have in the pipeline are worth double that. Revenue growth means a growing workforce, which has increased by a third over the past 12 months.

Wayne Lam, a consultant at technology research firm CCS Insights, says the machines that ASML makes take years, if not decades, to develop and perfect.

ASML has been working on its highest specification machines since the early 2000s, leaving a significant amount of catching up to do for other companies in this space.

“I’m sure there are competitors in the works…but there is no real competitor for ASML in the short term,” he says.

Not bad for a company once called “relatively obscure” by the BBC, a quote Mr Hoffman printed on a hoodie.

Being such a crucial cog in the global electronics industry brings difficulties.

ASML is currently in the US-China rivalry.

China has long wanted to make the most advanced computer chips, for which it needs ASML machines.

But as of 2019, the US is effectively preventing ASML from exporting these machines to China.

Joris Teer, a strategic analyst at the Center for Strategic Studies in The Hague, says the US is keen to prevent China from catching up in chip technology.

“The US has shifted its goals from being a few generations ahead of its rivals to as far ahead as possible – which may also mean pushing your rivals back as much as possible,” he says.

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An agreement on ASML exports has reportedly been reached between the Dutch and US authorities, but the details have not been made public.

In a statement in response to the news, ASML said any restrictions would require lengthy work before legislation could be implemented.

In the long term, ASML Managing Director Peter Wennink does not see any negative effects of the export restrictions on his business.

“If the semiconductors can’t be made in China, they will be made in China [South] Korea, in the USA or in Europe or in Taiwan. Eventually we will ship these machines because the world needs this capacity,” he says.