The Dutch Company That Dominates Tech
The picture above is of an ASML Lithography machine that costs about $350M for the latest <5nm machines. I had heard of ASML as I follow the Semiconductor industry but through the excellent book “Chip War” by Chris Miller found out how absolutely dominate ASML is in the obscure market for Lithography machines.
I am writing this blog now for two reasons.
- I am about halfway through a book called “Focus: The ASML way - Inside the power struggle over the most complex machine on earth” by Mark Hijink, a Dutch author that is very familiar with the inner workings of ASML.
- The ridiculous Tariffs being enacted by the current administration with zero understanding of the complexity of how and why Taiwan dominates the chip industry today.
First the book is fantastic as it delves into the obscure and often turbulent history of ASML. I have read many a story about startups and generally enjoy them all as every startup is unique and yet they all have commonalities as well. I dare say ASML might be the most unique startup story I have read.
- It was from a Joint Venture with Philips, yes the one and same semiconductor company I once worked for. You are not incorrect to think that there is no such thing as Philips Semiconductors, it was spun out of Philips to become what you might know as NXP Semiconductors.
- There is no Jensen Huang or Bill Gates or Mark Zuckerberg at ASML. The company had plenty of colorful personalities to be sure, but not that one driving founder CEO you think of for a successful startup. Rather a series of very different CEOs that led ASML during different periods of growth.
- ASML had the usual array of near death experiences that startups are prone to, but their story is unique in that their product is actually not a single thing but a collection of amazing technology held together by seemingly magic.
- Finally ASML is a uniquely Dutch story as the founding team was very Dutch and I say this having worked at Philips and seen up close the unique culture of the Netherlands.
ASML is not a random set of letters it means “Advanced Semiconductor Materials Lithography” a very apt descriptor of what ASML does. The company is headquartered in Veldhoven, Netherlands. You are not alone in never having heard of Veldhoven.
The Netherlands is a tiny country relatively speaking and I have been to Eindhoven (Philips HQ), Amsterdam of course and have even been to The Hague, Appledorn, Rotterdam and Utrecht. I have even been to Scheveningen, tough name for foreigners to say but a town that has a boardwalk not different from my own Santa Cruz Beach & Boardwalk here in California. I had never heard of Veldhoven.
Veldhoven is near Eindhoven, the Philips HQ town\city in the Provence of North Brabant. The town of Veldhoven and Eindhoven are equi-distance to the Eindhoven airport.
CEOs
Unlike NVIDIA where Jensen Huang has reigned supreme as CEO for over 30 years as the founding CEO, ASML has had a series of different CEOs of the years, almost as though they put the right person in the seat each time.
“Founder”
It must be noted the original “founder” of ASML was never actually the CEO of ASML but his shadow looms large over the ASML story. Arthur Del Prado a Dutch engineer and entrepreneur was the first to suggest a joint venture between Philips and ASMI holding of which Arthur was the CEO. He is a legend in the ASML lore but never actually served as CEO of the company.
Arthur Del Prado passed away in 2016 but not before being recognized by the Semiconductor industry for his tremendous contribution by putting the pieces together to launch but not found ASML.
After the launch of ASML each CEO was unique and each served for anywhere from 6–10 years. That may sound short for a CEO tenure as compared to Bill Gates or even Steve Ballmer who served as Microsoft’s CEO for 14 years although many would consider his tenure not successful but not a failure either.
Gjalt Smit (1984–1990) — Dutch Citizen — Gjalt joined from Philips and was an engineer by trade. He led ASML for 6 years as they left the comfort of Philips and their largess as well as their incredible R&D resources.
Willem Maris (1990–1999) — Dutch Citizen — Willem had a background in operations and management. Well known for stabilizing the company during a difficult time by focusing on customer relationships.
Doug Dunn (1999–2004) — British Citizen — Doug Dunn came from a finance background and had a reputation for tight budget constraints, something ASML had not had previously. Doug according to the book Focus was brusk and direct, which for a Dutch company seems like a fine fit. The book makes Doug sound quite rough around the edges.
Eric Meurice (2004–2013) — French Citizen — Eric was from an engineering background previously spending time with Thomson and Dell. Focused on strategic partnerships that led to ASML leading the way in the new EUV technology that put ASML at the forefront of the semiconductor business for the foreseeable future.
Peter Wennink (2013–2024) — Dutch Citizen — A former auditor and finance leader that had been with ASML since 1999, he oversaw a rapid expansion of the company while navigating new geopolitical issues for the company.
Christophe Fouquet (2024–Present) — French Citizen — Joined ASML in 2009 and having risen up in the technology side of the business he is now chartered with arguably the most difficult period as the company’s largest customer TSMC is embroiled in the trade war between China and the USA.
The book Focus shares some insight into why the tenure for the ASML CEO might be shorter than most other tech CEOs. Basically what ASML does is borderline INSANE. The machines they build are a amalgamation of various highly technical components and subsystems any one of which could overwhelm a normal manager.
ASML was built on a run fast and fix things quickly philosophy.
Their machines are built as new technologies often unproven come on line and they experiment as they build even tweaking after the initial build in their factory in Veldhoven even as the device is delivered to a chip fab in Taiwan or Arizona. One story from the book recounts how the machine turned out bigger than the original spec to the point that upon delivery to the client, they had to cut a wall open to fit the machine into the building upon delivery.
Honestly reading the book Focus about how ASML delivers the newest machines stressed me out and I was only reading about it. Remember the current generation of machine sells for $350 Million EACH.
Think about this for a moment a current generation ASML Lithographic Machine costs almost 3X a new Boeing 737 Max.
When you read about how ASML assemblies the newest generation of their product you do not ONCE think “sure I would fly on that” as the whole thing sounds like controlled chaos.
Funnily enough estimates show a Boeing 737 has over 6,000 semiconductors, so clearly some of them came from an ASML machine at some point.
ASML is building amazing technology it is just how they build them sounds like a chaos monkey dancing a ballet while drinking whiskey.
Why Did ASML Win
To hear US trade leaders talk today you would think ASML and TSMC as well as others “stole” the semiconductor business out from under the USA’s leading tech companies like Intel, AMD and others.
Pure nonsense.
The fact is that the Dutch government backed ASML when the going got tough, even helping them when a huge downturn in semiconductors required a large layoff. ASML, Philips and their partners including Weiss, a German lens maker all invested in R&D even when the payoff was in the very distant future.
In the early days there were American companies making semiconductor lithography machines. One such company called SVG actually struggled and sold out to ASML for over $1B which required US congressional approval. The US approved the sale for one simple reason, otherwise the Japanese leaders in the space Nikon or Canon would have gained a lead. To be clear both Nikon and Canon are formidable competitors but they have just not kept up with the latest technology.
ASML invested in EUV (Extreme Ultraviolet) technology that allowed the proverbial “Moore’s Law” to continue unabated. It took 20 years and billions to get EUV to market and it was not only ASML but other US companies including a San Diego company that provided the light source called Cymer, later acquired by ASML. Another opportunity missed by US companies.
The development timeline of EUV was long and arduous but also points to a key European and ASML trait. Partnerships. And it has to be noted that not everyone thought EUV was the path forward, but ASML basically bet the company on this new technology.
EUV is the perfect application of complex physics and science to a real world manufacturing problem.
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If you understand this then you are smarter than me, but here is EUV.
What this amazing breakthrough did delivered this:
The light source inside an EUV machine is a tin droplet hit by a laser, turned into plasma hotter than the sun — all to create a few milliwatts of usable light.
The book Focus made clear that EUV was not solving for a single hard issue but multiple hard issues, some technical some literal physics.
- Plasma light sources
- Reflective optics (normal lenses don’t work at 13.5 nm!)
- Mask defect inspection
- Pellicles (protective layers that don’t ruin the light path)
- Cleanroom vibration control at nanometer precision
Today of the many large companies that supply new equipment to a Semiconductor fab facility, ASML is the biggest based on 2024 revenue. This remains a high growth market segment as the global semiconductor equipment market reached an all-time high of $117 billion in 2024, marking a 10% increase from the previous year.
So the US government wants to build US based semiconductor fabs, sounds great right.
A new fab costs about $20 billion. Fair enough, but what makes up that $20 billion price tag. It is more than equipment but it does require a long term commitment to be sure. ASML and the other equipment providers take up the majority of the $20B price tag. with other costs adding up to billions as well.
That is a lot of money but I am confident the USA can afford it. Now how long does it take to build these new fabs. Well I used ChatGPT to answer that and to quote my new bestie
“Building a semiconductor fab is like cooking a soufflé: time-sensitive, full of hidden variables, and prone to collapsing under the wrong conditions. And yes, it often takes longer in the U.S. than in Taiwan — sometimes a lot longer.” — ChatGPT
So if you started today in the USA, a certain someone would be out of office by the time it was done.
American Ingenuity can overcome these roadblocks, right? Well here are two TSMC real world examples and timelines.
- TSMC Taiwan (Fab 18 for 5nm/3nm)
Started: 2018 → Production: ~2020 (Phase 1)
🏁 On time, efficient, and scaled in phases - TSMC Arizona (Fab 21)
Announced: 2020 → Originally targeted 2024
⏳ Delayed to 2025+ for 5nm; 3nm now expected ~2027
⚠️ Cited delays: labor shortage, lack of supplier ecosystem, permitting
DOH. According to numerous semiconductor publications in the USA, the issue is the US workforce is not up to speed on the latest semiconductor fab builds.
Worst Case
No one likes to think worst case, but as the saying goes
“Hope for the Best, Plan for the Worst.”
I read in Chip Wars and have since confirmed that ASML has installed a “kill switch” in the latest ASML EUV machines. Why on earth would a company buying a $300M machine allow the manufacturer to install a way to disable the machine remotely?
China claims “ownership” of Taiwan and has troops and a military arsenal that could prove formidable in the event China decides to take over Taiwan. Prior to the current administration my belief had always been we would defend Taiwan against China. This administration has sent mixed messages on that strategy so nothing is guaranteed.
The straight of Taiwan stands between Taiwan and China and TSMC’s sophisticated chip factories stand as a “Silicon Shield.” Well as it goes if China attacks Taiwan the decision has been made for Taiwan to use a “scorched earth” philosophy and completely shut down their incredible chip making industry.
The Taiwanese government has pushed back on TSMC moving more Fabs to the USA for this reason as it weakens the “Silicon Shield.”
Neither China nor the USA seem to be accounting for the fact that semiconductors make up a large part of today’s modern military.
Drones — Chips
Tanks — Chips
Planes — Chips
Missiles — Chips
Neither side could afford to lose Taiwan’s chip fabs and continue to fight a modern war. Hopefully common sense prevails and Taiwan remains a sovereign nation for the foreseeable future.
It Takes a Village
The African Proverb “ If you want to go fast go alone, if you want to go far, go together”
ASML decided to take this one further and go fast AND far together. The book Focus makes clear that ASML had clear ideas about how to move fast and fix things. They also relied on partners to ensure they were always delivering the best.
The early years of an ASML partnership with the German lens company Carl Zeiss makes for some “lost in translation” moments where Dutch impatience and agility meets German precision. The book Focus describes two years of quarterly screaming matches that eventually led to a symbiotic relationship second to none. If the author is to be believed these meetings included people throwing things at each other.
When it came time to build out EUV, ASML chose to form a strategic joint venture between Zeiss and ASML called Carl Zeiss SMT. ASML invested over €1 billion into Zeiss’s production capacity to ensure it could scale EUV optics. According to multiple sources in the world of Semiconductors:
Zeiss is the only company in the world capable of producing the ultra-precise, multi-layer EUV mirrors and projection optics needed for ASML’s systems.
Literally mirrors so smooth that if they were the size of Germany, their largest bump would be less than 1mm. Stop and picture that for a moment.
The vacuum chambers to make and polish the mirrors for EUV are large and complex. The only company in the world capable today is Carl Zeiss of Germany.
If you are a photography fan you will recognize the name Zeiss as the best camera lens maker since the late 1800s. Their expertise and precision led to the company making the largest and most precise mirrors in the semiconductor world.
Venture VINE
Well since my blog is Venture VINE, did you know that the Dutch have a wine industry too. Nowhere near as impressive as their homegrown ASML but not to be discounted either.
The Provence of Brabant, home to ASML is also known for wine.
You might want to enjoy a fruity glass of Viognier at the Netherlands’ oldest and best-known winery The Apolstelhoeve as noted in the picture above.
A highly recommended wine from the Netherlands according to those that know Dutch wine better than me is Cuvee XII from The Apolstelhoeve winery.
Dank U Wel as they say in the Netherlands, I hope you choose to pick up the book Focus as it makes for fabulous reading and hard to believe anecdotes about this amazing Dutch company.
