How ASML, TSMC And Intel Dominate The Chip Market | CNBC Marathon

ASML's monopoly on EUV lithography machines, essential for producing advanced processor chips, has positioned it as a critical player in the global chip market. TSMC and Intel, major chipmakers, are heavily reliant on ASML's technology. TSMC, in particular, has leveraged its partnership with ASML to become a leader in high-volume production of advanced chips, surpassing Intel. Meanwhile, Intel, once a pioneer in chip technology, has struggled to keep pace with TSMC and Samsung, partly due to delays in adopting EUV lithography. The semiconductor industry's reliance on a few key players and locations raises concerns about supply chain vulnerabilities and national security, prompting efforts to increase domestic production capacity, as seen with TSMC's new fab in Arizona and Intel's expansion plans.

Takeaways

• 🌐 ASML holds a monopoly on the fabrication of EUV lithography machines, which are essential for producing the most advanced microchips.
• 🚀 ASML's EUV machines are the only way to print minuscule designs on chips and cost up to $200 million each, with the company being the sole provider globally.
• 📈 Due to a chip shortage, the demand for ASML's machines has never been higher, and its stock has skyrocketed since 2018.
• 🌟 TSMC, Intel, and Samsung are ASML's three main customers, competing to be the first to access ASML's breakthrough technologies.
• 🔬 ASML's EUV technology uses extreme ultraviolet light to print smaller, more complex chips, revolutionizing chipmaking.
• 🏭 The fabrication process of these advanced machines is incredibly intricate and requires precision down to the atomic level.
• 🌍 ASML's success has made it more valuable today than Intel, one of the biggest chip makers it supplies.
• 📊 TSMC, a major customer of ASML, has become the world's largest contract chip manufacturer, producing chips for a wide range of applications and industries.
• 🔄 The chip industry has evolved into a complex ecosystem with specialized companies focusing on different aspects of chip design and manufacturing.
• 🌟 Intel, once a leader in chip technology, has fallen behind TSMC and Samsung in the race for the most advanced chip manufacturing technology.

Q & A

What type of monopoly does ASML have in the chip manufacturing industry?

ASML has a monopoly on the fabrication of EUV (Extreme Ultraviolet) lithography machines, which are the most advanced type of lithography equipment needed to make every advanced processor chip used today.

What is unique about the technology manufactured in the United States by ASML?

The unique technology manufactured by ASML in the United States is the EUV lithography machine. It is the most advanced and is critical for producing every advanced microchip that powers the modern digital age.

How has the pace of technology innovation impacted the chip market?

The pace of technology innovation has led to an unstoppable demand for more advanced and powerful chips. This has resulted in continuous improvements and developments in chip manufacturing technology, pushing the boundaries of known physics.

What is the significance of the EUV machine in the chip manufacturing process?

The EUV machine is significant because it uses extreme ultraviolet light to print smaller, more complex chips. It is the only way to print minuscule designs on chips and is the most expensive step in making every advanced microchip.

How has ASML's monopoly on EUV lithography machines affected its stock and market position?

ASML's monopoly has led to a skyrocketing stock price since 2018, making it more valuable than major chip makers like Intel. Its three main customers, TSMC, Intel, and Samsung, compete to be the first to access ASML's breakthrough technologies.

What was the vision that started 50 years ago with bringing the digital world onto a chip?

The vision that started 50 years ago was to miniaturize and integrate digital technology onto a single chip, revolutionizing the way we use and interact with technology in our daily lives.

What is the role of TSMC in the global chip market?

TSMC (Taiwan Semiconductor Manufacturing Company) is a key player in the global chip market, manufacturing advanced chips for a wide range of applications and clients, including high-end processors, smartphones, and even U.S. fighter jets. It is currently leading the pack in chip technology, being the first to deliver high volume chips made with EUV.

What is the significance of TSMC's investment in a new fabrication plant in Arizona?

TSMC's investment in a new fabrication plant in Arizona is significant because it marks the company's effort to bring the world's most advanced chip making back to the U.S. This move is expected to help ease the global chip shortage and reduce dependency on overseas manufacturing, enhancing national security and economic interests.

What is the impact of the chip shortage on various industries?

The chip shortage has had a widespread impact on various industries, causing back orders of everything from gaming consoles like the PS5 to electric vehicles like Teslas. It has also affected the production of cars, data centers, and many household devices.

How does the development of ASML's next-generation EUV machine, High-NA, affect the future of chip manufacturing?

The development of ASML's High-NA machine is expected to push the boundaries of known physics and further advance chip manufacturing technology. It promises to enable the production of even smaller, faster, and more complex chips, which will be crucial for the continued growth of the digital age and technological innovation.

What challenges does ASML face in maintaining its monopoly and meeting the growing demand for EUV machines?

ASML faces challenges such as the high cost of producing EUV machines, which is so expensive that most companies cannot afford it. Additionally, there are geopolitical tensions and export control measures that could impact ASML's ability to sell its products, especially in regions like China.

Outlines

00:00

🏭 ASML's Monopoly on EUV Lithography Machines

ASML holds a monopoly on the fabrication of EUV (Extreme Ultraviolet) lithography machines, which are essential for producing the world's most advanced processor chips. The company, based in the Netherlands, is the sole provider of this critical technology, manufacturing machines with atomic level precision that are the most expensive part of microchip production. ASML's machines are relied upon by data centers, cars, and devices like iPhones. The company's unique position was established through strategic partnerships and innovations, and despite the chip shortage, its stock has soared. ASML's success is such that it is now more valuable than major chip maker Intel.

05:03

💰 The Cost and Complexity of EUV Lithography

EUV (Extreme Ultraviolet) lithography is a revolutionary technology developed by ASML to print smaller and more complex chips. The process is incredibly expensive, with each machine costing up to $200 million and the development being a costly endeavor. ASML's EUV machines require precision lasers, exploding molten tin, and the smoothest surface in the world to operate. The company's crucial role in chipmaking has led to consistent double-digit growth and global reliance on its technology. ASML's EUV machines are so advanced that they have allowed the company to dominate the market, with its biggest competitors being Nikon and Canon for older DUV (Deep Ultraviolet) technology.

10:04

🌐 Global Demand and the Chip Shortage

The global demand for advanced chips has never been higher, driven by the need for more solutions to improve daily life. ASML's customers, including TSMC and Samsung, are the world's leading semiconductor manufacturers, producing the majority of the world's most advanced semiconductors. The chip shortage has raised concerns about dependency on overseas production, leading to initiatives like the U.S. Chips Act to encourage domestic production. Major chip manufacturers are investing billions to increase capacity, including TSMC's $12 billion fabrication plant in Arizona, set to be the most advanced U.S. facility upon completion in 2024.

15:05

🔄 TSMC's Expansion and the Future of Chip Manufacturing

TSMC, the world's largest contract chip maker, is expanding its production capabilities in response to the global chip shortage. The company, which manufactures chips for a wide range of applications from consumer electronics to military technology, is investing $100 billion over three years to ramp up production. TSMC's expansion includes a $12 billion fabrication plant in Arizona, marking a significant shift in bringing advanced chip manufacturing back to the U.S. This move is seen as a strategic step to diversify manufacturing risks and to be closer to major customers and suppliers.

20:07

🌟 The Evolution of TSMC and the Semiconductor Industry

TSMC's rise to becoming the world's leading semiconductor manufacturer has transformed the semiconductor industry. Founded with the vision of focusing solely on manufacturing, TSMC's 'pure play foundry' model has allowed it to surpass industry giants like Intel. The company's success is attributed to its specialization, which has led to it manufacturing the majority of the world's chips. TSMC's decision to expand in the U.S. is driven by the need for greater proximity to its customer base and the potential to tap into a larger pool of analog designers. The company's expansion reflects a broader trend of increasing investment in domestic chip manufacturing capacity.

25:08

🚀 Intel's Challenges and Plans for复兴

Intel, once a leader in semiconductor manufacturing, has faced challenges in keeping up with the rapid advancements in chip technology. The company's strategy of being an integrated device manufacturer (IDM) became costly and complex as chip technology evolved. Intel's new CEO, Pat Gelsinger, has ambitious plans to revitalize the company by focusing on manufacturing and expanding production capacity in the U.S. and Europe. Intel aims to surpass competitors like TSMC and Samsung by 2025 through its IDM 2.0 strategy, which includes building new fabs and potentially entering the foundry business to produce chips for other companies.

30:11

🌐 The Global Semiconductor Landscape and U.S.复兴

The global semiconductor industry is experiencing significant changes, with a focus on increasing domestic production capacity in response to the ongoing chip shortage. The U.S. government's proposed Chips Act aims to provide $52 billion in subsidies to encourage chip manufacturing on U.S. soil. This shift could see the U.S. increase its share of global semiconductor production from the current 12% to a more substantial figure. The success of companies like TSMC and Samsung in leading-edge manufacturing has highlighted the risks of relying on a single region for such critical technology. The U.S. and other nations are investing heavily to ensure a more balanced and secure global semiconductor supply chain.

Keywords

ASML

ASML, or Advanced Semiconductor Materials Lithography, is a company that holds a monopoly on the fabrication of EUV (Extreme Ultraviolet) lithography machines. These machines are essential for producing the most advanced microchips that power the modern digital age. ASML's EUV machines are the only way to print minuscule designs on chips with atomic-level precision, and they are incredibly expensive, costing up to $200 million each. The company's crucial role in chipmaking has led to its wild success, making it more valuable today than Intel, one of the biggest chip makers it supplies.

EUV Lithography

EUV, or Extreme Ultraviolet, lithography is a cutting-edge technology used to manufacture the most advanced microchips. It involves using an extremely short wavelength of light to print smaller, more complex chips. The EUV process is revolutionary because it allows for the creation of chips with smaller features, which means the chips can be faster, smaller, and consume less power. However, developing this technology was incredibly expensive and complex, and only ASML has been able to master it, making it the sole provider of EUV lithography machines.

Chip Shortage

The chip shortage refers to the current global scarcity of semiconductors, which are essential components in a wide range of electronic devices, from smartphones to cars. This shortage has been caused by a surge in demand due to the digital transformation accelerated by the COVID-19 pandemic, coupled with supply chain disruptions. The chip shortage has led to backorders of various products, including gaming consoles like the PS5 and electric vehicles like Teslas. It has highlighted the need for increased chip production capacity and has spurred investments in semiconductor manufacturing, including by companies like TSMC, Intel, and Samsung.

TSMC

TSMC, or Taiwan Semiconductor Manufacturing Company, is the world's largest dedicated semiconductor foundry. It is responsible for manufacturing chips for a multitude of tech companies, including Apple, Nvidia, and AMD. TSMC has been at the forefront of semiconductor technology, being the first to produce high volume chips using EUV lithography. Its advanced manufacturing capabilities have kept TSMC at the head of the pack in chip technology, with its customers benefiting significantly from its leading-edge products. TSMC's importance in the global chip supply chain has led to major investments in expanding its production capacity, including a $12 billion fabrication plant in Arizona, USA.

Intel

Intel is a major American multinational corporation and technology company known for its role in the development of the microprocessor and the creation of the modern computer. Intel has traditionally been both a designer and manufacturer of its own chips, but it has faced challenges in recent years, falling behind competitors like TSMC in the production of the most advanced chips. Intel's stock has skyrocketed since 2018, but it is now focusing on catching up with its competitors by investing in new technologies and increasing its manufacturing capacity, including the development of its next-generation EUV lithography machines and a new High Numerical Aperture (High-NA) system.

High Numerical Aperture (High-NA)

High Numerical Aperture (High-NA) is a term referring to the next generation of EUV lithography technology that promises to push the boundaries of known physics and further advance chip manufacturing. This technology will allow for the creation of even smaller, faster, and more efficient chips. Intel has made a bold move to secure the first prototype of ASML's High-NA machine, which is expected to cost more than $300 million, in an effort to catch up with its competitors like TSMC. The development and implementation of High-NA technology will be crucial for companies like Intel to remain competitive in the rapidly evolving semiconductor industry.

Semiconductor

A semiconductor is a material that has electrical conductivity between that of a conductor and an insulator. Semiconductors are the foundation of modern electronics, including computers, smartphones, and other digital devices. They are used to create a wide range of electronic components, such as transistors and chips, which are the brains of these devices. The miniaturization and advancement of semiconductor technology have been central to the progress of the digital age, enabling the creation of increasingly powerful and efficient electronic devices. The video discusses the critical role of semiconductor manufacturing companies like ASML, TSMC, and Intel in the production of advanced semiconductors.

Moore's Law

Moore's Law is a prediction made by Intel co-founder Gordon Moore in 1965 that the number of transistors on a microchip would double approximately every two years, leading to an exponential increase in computing power. This law has guided the semiconductor industry for decades, driving innovation and the development of increasingly advanced chips. However, the video notes that Intel has struggled to keep up with this pace of innovation in recent years, falling behind competitors like TSMC and Samsung in the production of the most advanced chips. The challenge for Intel and other semiconductor companies is to continue pushing the boundaries of Moore's Law and maintain the pace of technological advancement.

Supply Chain

The supply chain refers to the network of businesses and processes involved in the production and delivery of a product, from raw materials to the end consumer. In the context of the semiconductor industry, the supply chain includes the design of chips, the manufacturing of semiconductors, and the assembly and distribution of finished products. The video highlights the complexity and global nature of the semiconductor supply chain, emphasizing the importance of companies like ASML, TSMC, and Intel in this network. The chip shortage has exposed vulnerabilities in the supply chain, prompting discussions about reshoring production and increasing domestic manufacturing capacity to reduce reliance on overseas suppliers.

Geopolitics

Geopolitics refers to the political and strategic factors that influence international relations and the distribution of power among countries. In the context of the semiconductor industry, geopolitics plays a significant role in determining the global landscape of chip production and distribution. The video discusses the geopolitical tensions between the U.S., China, and Taiwan, and how these dynamics affect the semiconductor market. For instance, TSMC's decision to build a fabrication plant in Arizona is influenced by geopolitical considerations, as it aims to diversify its production away from Taiwan and reduce the geopolitical risks associated with relying on a single location for advanced chip manufacturing.

Chip Fab

A chip fab, short for fabrication plant, is a facility where semiconductors are manufactured. The fabrication process involves complex steps, including the creation of silicon wafers, the application of photoresist, and the use of lithography to print circuit designs onto the wafers. The video discusses the construction of new fabs by major semiconductor companies like TSMC and Intel in response to the global chip shortage. These fabs are massive, high-tech facilities that require significant investment and specialized equipment, such as EUV lithography machines. The construction and operation of chip fabs are crucial for increasing the production capacity of semiconductors and addressing the current supply challenges.

Highlights

ASML holds a monopoly on the fabrication of EUV lithography machines, essential for creating advanced processor chips.

ASML's EUV machines are the only way to print minuscule designs on chips, costing up to $200 million each.

The company's crucial role in chipmaking has led to wild success, with its value surpassing that of Intel.

ASML's CEO, Peter Wennink, has been leading the company since 2013, with a history dating back to 1984 as a subsidiary of Philips.

TSMC, Intel, and Samsung compete to be the first to access ASML's breakthrough technologies.

ASML's EUV machines are manufactured in the United States and are the most expensive step in microchip production.

The development of EUV technology was incredibly expensive and required partnerships to fund it.

TSMC accounted for nearly 40% of ASML's sales last year, relying heavily on their advanced chip technology.

Intel has fallen behind TSMC and Samsung in chip technology, now focusing on catching up with bold investments.

The global chip shortage has led to increased demand for ASML's EUV machines, with only a handful of customers able to afford them.

ASML's lithography machines require precision to the atom, with an EUV cabin cleaner than outside air by 10,000 times.

An EUV machine can produce about 3,000 wafers a day, with each wafer potentially holding hundreds of chips and billions of transistors.

ASML's dominance in the EUV market has eliminated competition, with experts saying it could take decades for other companies to catch up.

The chip shortage has raised concerns about overseas dependency, leading to global initiatives to increase domestic production.

TSMC is investing $100 billion over three years to ramp up production amid the shortage, with a significant fab being built in Arizona.

Intel's new CEO has a plan to invest in manufacturing and help alleviate the global chip shortage.

Intel is unique as the only U.S.-based company that designs and manufactures advanced chips at scale.

The U.S. government's Chips Act proposes $52 billion in subsidies for chip companies to manufacture in the U.S., aiming to increase domestic production.