A deep dive into how ASML became a chokepoint for making cutting-edge chips by betting on EUV, closely collaborating with TSMC and the US government, and more
By betting on extreme ultraviolet lithography long before it worked, ASML became the chokepoint for cutting-edge chips.
Works in ProgressNeil Hacker
Context & Ripple Effects
Related coverage traces ASML from an already dominant supplier of costly EUV tools under China export restrictions to Europe’s most valuable tech company, with its next-generation High-NA transition approaching volume production.
The immediate backdrop is an AI-chip capacity push: ASML plans higher standard-EUV output in 2026, while a reported EUV light-source advance could raise tool throughput. The history explains why this supplier’s engineering roadmap and customer partnerships now matter far beyond its own sales.
First-order effects
ASML’s early EUV commitment and joint deployment work with TSMC concentrated leading-edge lithography capability in a supplier–foundry chain that rivals cannot quickly replicate.
TSMC and other advanced-chip producers remain directly exposed to ASML’s tool availability and performance improvements as they add capacity for AI-chip demand.
Second-order effects
A constrained EUV tool pipeline makes fab expansion depend not only on chipmakers’ capital spending but also on ASML’s manufacturing ramp and light-source progress, extending semiconductor capacity lead times.
Because EUV systems are subject to export restrictions in coverage, access to leading-edge production equipment becomes a competitive and geopolitical differentiator rather than a routine procurement choice.
Third-order effects
If higher EUV output and throughput improvements continue, the limiting factor in advanced-chip supply may shift among lithography tools, fab execution, and other parts of the AI-infrastructure stack rather than disappear.
The ASML–TSMC case points to a more durable industry structure in which a small number of specialized equipment suppliers carry outsized influence over compute capacity and export-control policy.
The trend: AI-driven demand is turning the advanced-chip toolchain into strategic infrastructure, with lithography capacity and access shaping the pace and geography of leading-edge compute expansion.
Beyond all the things ASML has achieved, it has also de-throned LVMH as Europe's most valuable company—a huge win for Europe's reputation. Highly recommend checking out the latest WiP edition for an excellent article on the company. So much detail! https://worksinprogress.co/... …
Europe has one of the most essential and irreplaceable companies in the global AI supply chain: ASML, which produces the machines that TSMC uses to make its chips. These machines are roughly the size of double-decker buses. To ship one requires 40 freight containers, three cargo
ASML, the only irreplaceable company in the AI ecosystem, is European. A beautiful article by @_neilhacker on how ASML got its monopoly and how the technology works. It leaves me wanting more—all the human stories behind. Someone write a book please! https://worksinprogress.co/..…
More good work from Works in Progress. There is more good thinking now from networks like this than in SW1 a decade ago. But the main problem for them and similar ventures is the DEMAND problem: SW1 politicians and spads stopped being interested in ideas, policy, how
ASML is one of the most impressive companies today and is only getting more important. I wrote a piece in the new issue of @WorksInProgMag about how they got their monopoly on the world's most complex machine.