ASML: Why Do Data Centers, iPhones, and AI Models Depend Heavily on This Semiconductor Company?

Synopsis: ASML is the invisible backbone of modern technology, making the EUV machines that enable advanced chips for iPhones, AI, and data centers. Its decades of R&D, unique supplier network, and integration into global fabs create an unbreakable monopoly, while export controls keep China from accessing its most advanced tools today.

Every modern technology that shapes our daily life is built on invisible computing power. Your iPhone feels fast because of an ultra-advanced chip inside it. AI tools like ChatGPT depend on massive data centers packed with powerful processors. Cloud computing stores and processes your photos, videos, and apps using thousands of connected servers. Electric vehicles rely on chips to manage batteries, motors, and safety systems. Even simple activities like gaming, scrolling on Instagram, or watching YouTube run on complex semiconductor technology working silently in the background. The digital world may look like software and apps, but beneath it all is cutting-edge hardware.

All of this, from smartphones to artificial intelligence, from social media to electric cars, runs on increasingly advanced chips that are getting smaller, faster, and more energy-efficient every year. Companies like Apple design devices, Nvidia builds AI processors, and TSMC manufactures chips at scale. Yet the most critical company behind all of this is not Nvidia, TSMC, or Apple, it is ASML.

What Is ASML? 

ASML is a Dutch technology company based in the Netherlands, but unlike most famous chip firms, it does not design or manufacture chips itself. Instead, ASML builds the ultra-complex machines that make advanced chips possible in the first place. Its full name is ASML Holding N.V., originally standing for Advanced Semiconductor Materials Lithography.

Founded in 1984 as a joint venture between Philips and ASM International and becoming fully independent in 1995, ASML has grown into the world’s largest and most important supplier to the semiconductor industry. As of January 2026, the company had a market capitalization of around USD 527 billion, making it Europe’s most valuable technology company. ASML is listed on both the Euronext Amsterdam and Nasdaq and is part of major indices like the Euro Stoxx 50 and Nasdaq-100.

The company’s most important product is its extreme ultraviolet (EUV) lithography machine, the most advanced tool ever created for making cutting-edge chips. Think of it this way: if chips are books, ASML makes the printing press that allows those books to be produced at scale with incredible precision. While companies like Nvidia design chips and TSMC manufactures them, ASML provides the indispensable machine that makes advanced chip manufacturing possible. In simple terms, without ASML’s EUV technology, the world’s most powerful modern chips, the ones that power iPhones, AI, and data centers, could not be made at all.

How Are Chips Made?

Chip manufacturing begins with a perfectly polished circular slice of ultra-pure silicon called a wafer. This wafer acts as a blank canvas for building a chip. Manufacturers deposit extremely thin layers of materials such as silicon dioxide and metals onto the wafer and then coat it with a light-sensitive material called photoresist. A lithography machine shines carefully controlled light through a patterned mask onto the wafer to “print” tiny shapes. Chemicals then wash away selected areas, and this process of layering, printing, and etching is repeated many times to gradually build the structure of a chip.

Each repetition of this process adds more complexity until billions of microscopic switches called transistors are created on a single chip. Transistors act like tiny on/off switches that process information inside every electronic device. Among all the steps in chipmaking, the most important is lithography, because it determines how small, fast, and energy-efficient the transistors can be. This is the step that ASML effectively controls for the world’s most advanced chips.

For older or less advanced chips, manufacturers use DUV (deep ultraviolet) lithography, a technology supplied by multiple companies such as Nikon and Canon. However, for cutting-edge processors used in AI, smartphones, and data centers, only EUV (extreme ultraviolet) lithography works. ASML is the only company in the world that produces EUV machines, a fact recognized across the semiconductor industry. This is why ASML becomes irreplaceable: without its EUV tools, modern advanced chips simply cannot be manufactured at scale.

Why EUV Is a Game Changer? 

Extreme ultraviolet lithography, or EUV, is a breakthrough technology that has transformed advanced chipmaking. It allows manufacturers to print far smaller patterns on silicon, which means more transistors can fit onto a single chip. More transistors make chips faster, more powerful, and more energy-efficient. ASML dominates this field because it is the only company in the world that makes EUV machines. These systems can carve features as small as 8 nanometers, which is about 1/10000 the width of a human hair, enabling the cutting-edge processors used in today’s smartphones, AI systems, and data centers.

An EUV machine works in a highly sophisticated way. It fires a powerful laser at tiny droplets of molten tin, creating a plasma that emits EUV light at a wavelength of 13.5 nanometers. This light is reflected using ultra-precise mirrors made by Zeiss and directed onto a silicon wafer to print chip designs layer by layer. After decades of research, the first working prototype appeared at IMEC in Belgium in 2009, and ASML delivered its first commercial system in the early 2010s. Since then, the company has shipped around 140 EUV systems, with its most popular model, the TWINSCAN NXE:3600D, costing up to USD 200 million, weighing 180 tons, and requiring three Boeing 747 planes to transport.

This is why EUV is a true game changer. It is what allows iPhones to be powerful, AI models to run smoothly, and data centers to operate efficiently. Nvidia designs the most advanced chips, and TSMC manufactures them, but ASML makes the machine that makes that manufacturing possible, placing it upstream of everyone else in the chip supply chain. ASML is now developing an even more advanced version called High-NA EUV, priced around USD 370 million per system, with early shipments already going to Intel and TSMC for research. 

Why Is It The Only One?

The 15-Year, USD 10 Billion Barrier

ASML’s near-monopoly in EUV is not an accident of luck, it is the result of a brutal combination of time, money, and technological endurance that few companies can even attempt to match. It took ASML over 17 years to develop workable EUV lithography, an extraordinarily long capital cycle in the tech industry. According to sources, any company starting from scratch today would likely need around 15 years and more than USD 10 billion just to build a machine that is merely “workable,” not necessarily better than ASML’s.

In theory, companies like Nikon and Canon are ASML’s closest competitors in lithography. In practice, they are nowhere near capable of taking on EUV. Canon spends about USD 2.4 billion annually on R&D across four divisions, while Nikon spends only around USD 483 million across four divisions. Expecting either company to suddenly pour an additional USD 10 billion into a single risky project, while absorbing operating losses for 15 years, is close to an unachievable business hurdle. Shareholders would revolt long before success arrived, if it ever did.

This makes ASML’s position structurally unassailable. Even if a competitor had the ambition, very few firms in the world have the patience, financial muscle, and long-term vision to survive a decade-and-a-half moonshot project with no guarantees of success.

ASML’s Real Power: A Global Supply Chain “Machine”

ASML’s strength goes far beyond its technology, it comes from a highly organized global supply chain. Surprisingly, ASML only makes about 15 percent of an EUV machine itself. The remaining 85 percent comes from thousands of specialized suppliers around the world. Over more than two decades, ASML has built this network into a finely tuned system that works like a machine in itself.

Frits van Houts, who led ASML’s EUV business, described this supply chain as a “machine” where every partner must meet extremely precise standards. ASML does more than buy parts, it supports and invests in its suppliers to make sure they can meet the company’s exacting requirements. For example, in 2016, ASML invested USD 1 billion in Zeiss to strengthen its mirror technology for EUV systems. These deep partnerships make suppliers loyal to ASML in ways that money alone cannot buy.

A new company trying to compete would face a nearly impossible challenge, either build all the components in-house (which is unrealistic) or convince ASML’s trusted suppliers to leave a highly profitable, long-term partner. On top of that, ASML has over 20 years of institutional knowledge about how to assemble, deliver, and scale EUV machines reliably. Copying that know-how would be as hard as building the machines themselves.

Fab Lock-In: Why Chipmakers Can’t Just Switch

Even if a rival somehow built a working EUV machine, chip factories or fabs are essentially “locked in” to ASML. A modern fab takes 3-4 years to build and costs around USD 20 billion. ASML’s DUV and EUV machines alone account for 20-25 percent of that cost, meaning fabs are designed around ASML equipment from the start.

Using a non-ASML EUV machine would require redesigning entire fabs. Production would have to stop, causing huge operating losses. Since fabs are standardized across multiple locations to reduce defects and improve efficiency, a company would likely need to replace all existing ASML machines across all its fabs to keep everything uniform. The cost and production halt would be massive.

Access to ASML’s EUV machines is extremely limited, only the world’s top chipmakers, including TSMC, Samsung, SK Hynix, Intel, Micron, and Japan’s Rapidus, are allowed to use them, giving these companies a decisive edge in producing the most advanced chips.

In simple terms, even if a competitor made an EUV machine, chipmakers would have little reason to switch. ASML is not just a supplier, it is built into the very structure of the global semiconductor industry, making it nearly impossible to replace.

ASML and China 

Since 2018, ASML has been at the center of a growing technology conflict between the United States and China. The U.S. government began pressuring the Netherlands, where ASML is based, to stop the company from selling its most advanced EUV lithography machines to Chinese customers. These restrictions became much stricter in 2022 when the Biden administration introduced broad export controls aimed at limiting China’s access to cutting-edge chipmaking technology. ASML has confirmed to Reuters that it has never sold a single EUV system to China.

The U.S. restrictions did not stop at EUV. They were also extended to older DUV (deep ultraviolet) machines, which are used to make less advanced chips such as those previously designed by Huawei. The goal of these controls has been to keep China at least one full generation behind in semiconductor manufacturing. American officials said that the Trump administration had already strengthened enforcement of export rules and was working with allied countries to close any loopholes as technology continued to evolve.

These measures have significantly slowed China’s push for semiconductor self-reliance. According to sources familiar with the matter, export controls have constrained advanced chip production in China for years, particularly affecting companies like Huawei. At the same time, the Dutch government has begun developing new policies requiring security screening at research institutions to prevent sensitive technology from being accessed by individuals who could misuse it or be pressured by foreign governments.

In the end, ASML is the quiet engine behind the modern digital world. We see and talk about companies like Apple, Nvidia, TSMC, and Tesla, but none of them could exist in their current form without ASML’s machines. While these companies design products or make chips, ASML makes the one tool that makes advanced chipmaking possible in the first place.

Because EUV technology is extremely complex, expensive, and difficult to build, no other company has been able to challenge ASML’s dominance. Its deep relationships with suppliers, long history of research, and integration into global chip factories make its position almost impossible to replace.

So when you use your iPhone, run an AI tool, store photos in the cloud, or drive an electric car, you are indirectly relying on ASML, a company most people have never heard of, but one that shapes nearly every piece of modern technology we depend on today.

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