The semiconductor monopoly: How one Dutch company has a stranglehold over the global chip industry

SHARE:

When we speak of monopolies in the economic sense, the one word that comes to mind if OPEC, or the Organization of the Petroleum Exporting Countries. This is an organisation consisting established by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, countries that were once the biggest exporters of crude oil.

The formation of OPEC allowed these countries to essentially set the rules and more importantly, prices at which crude oil will be sold to other countries. It was, and continues to be a monopoly in the truest sense of the word. However, as powerful and all-encompassing OPEC is, they do not necessarily have a stranglehold over the production and processing of crude oil.

In terms of silicon chips, though, there is one organisation, or rather, one company which has complete control over the global semiconductor industry. And while Taiwan and China may be the biggest chip-manufacturing countries in the world right now, they wouldn’t be what they are without licensing some essential technology and machinery from this company.

We are, of course, talking about ASML Holdings, a Dutch multinational corporation that today, is primarily known for its semiconductors business.

How are semiconductors and silicon chips made?
Whether you speak of TSMC, NVIDIA, Intel, AMD or any other tech giant that makes its own silicon chips, they follow the same process. All of these chip makers use a large sheet of silicon called wafers, which believe it or not, is made using a special kind of sand. Manufacturers then slice these wafers into thin layers and smaller pieces which are then packaged and programmed according to their use cases. Once that is done, these packages containing a silicon chip are sent off to be used in different products.

The technology that all of these manufacturers use to slice and cut that piece of wafer, is called ultraviolet lithography. Now, there are various grades of lithography, which differ in how finely or thinly a wafer is sliced. In regular day-to-day parlance, this is also called process and is measured in nm. For example, Apple will start making their next-generation silicon chips using the 3nm process. 

The finer the slices of the wafer that a chipmaker can cut, the faster and more efficient the processor is going to be. That is why chipmakers are always trying to crack a lower or rather finer chip-making process.

But where does ASML fit into all of this? Well, the ultraviolet lithography technology that is used all these chipmakers is owned by ASML. Also, the machinery that chipmakers use to physically slice and cut the wafers, is manufactured by ASML.

The semiconductor monopoly_ How one Dutch company has a stranglehold over the global chip industry

What does ASML do?
The latest technology to slice silicon wafers is called EUV or Extreme Ultraviolet lithography. ASML is the only company that has the technology for building chip manufacturing machinery with extreme ultraviolet lithography, and as chip manufacturers have claimed, EUV is the future of slicing wafers.

There’s also another method or technology to slice wafers, called Deep Ultraviolet Lithography, or DUV, but that is an older and less efficient way to go about. When we consider Ultraviolet Lithography, ASML has some competition from the likes of Canon and Nikon, but even in such a scenario, ASML has about 62 per cent of the market. 

Although DUV is an old and inefficient methodology, it is still so complicated that the Chinese still haven’t been able to copy it and reverse engineer it properly and mind you China has a reputation of cloning/reverse engineering some of the most over-engineered products in tech history. And it is unlikely that they will be able to copy EUV or reverse engineer it anytime soon, even if they somehow manage to get their hands on one of ASML’s machines. 

The semiconductor monopoly_ How one Dutch company has a stranglehold over the global chip industry (2)

ASML sells its EUV chip-slicing machinery for about $200 million a set, and all major chip makers, including Intel, NVIDIA and TSMC have to buy these machines for their core functionalities. Taiwan’s TSMC has a special arrangement with ASML because of they used to purchase their machinery much before Intel, Samsung and other major chip makers. Because of this, TSMC and companies that used their silicon had a slight generational advantage over their rivals.

The sway that the Netherlands has over the global silicon trade
The United States has only recently jumped into the global silicon trade – it has practically bought its way into the industry, by allowing TSMC and Intel to set up factories in the US at high subsidies and tax breaks. The reason why the US wants a larger piece of the global silicon industry now is because of China.

Western countries, mainly the US has tried to impose all sorts of regulations and trade embargoes on countries like Japan and Netherlands, mainly so that the Chinese don’t have access to EUV chipmaking, and by extension, the next generation of chips and electronic hardware. This is also the reason why the US has been trying to cajole the Netherlands to impose sanctions on ASML themselves and stop them from dealing with China. To ASML’s credit, they have paused their dealings with China, and haven’t sold them any new EUV machinery, but continue to sell them old pieces of DUV machinery.

The semiconductor monopoly_ How one Dutch company has a stranglehold over the global chip industry (1)

The Dutch, however, have made it clear that they will not bow down to the US’ demands of imposing a sanction on China. Liesje Schreinemacher, the Dutch Minister of Foreign Trade has maintained that they will lead discussions with their partners like Japan, South Korea, Taiwan, Germany and France.

Moreover, ASML is already working on a new generation of lithography machine called high-NA-EUV. High-NA-EUV will allow chipmakers to make 2nm processors, which will mark a major milestone in chip production.

Read all the Latest NewsTrending NewsCricket NewsBollywood News,
India News and Entertainment News here. Follow us on FacebookTwitter and Instagram.

यह भी पढ़ें

[TRENDING]_$type=ticker$count=9$cols=4$cate=0$color=#0096a9$sp=3500

Name

Article,4,ASE News,2,Business,23,codecanyon,3,DPR,1,Education / Employment,1,Entertainment,10,IANS – The Siasat Daily,3,India news,4165,Latest news,1,Madhy Pradesh,465,main,19,National,162,News,1,PTI – The Siasat Daily,3,Sports,11,World,22,World News,1721,
ltr
item
The semiconductor monopoly: How one Dutch company has a stranglehold over the global chip industry
The semiconductor monopoly: How one Dutch company has a stranglehold over the global chip industry
https://images.firstpost.com/wp-content/uploads/2023/01/The-semiconductor-monopoly_-How-one-Dutch-company-has-a-stranglehold-over-the-global-chip-industry.jpg
ASE News
https://www.asenews.page/2023/01/the-semiconductor-monopoly-how-one.html
https://www.asenews.page/
https://www.asenews.page/
https://www.asenews.page/2023/01/the-semiconductor-monopoly-how-one.html
true
8343353446356446311
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy Table of Content