Our Take
ASML's EUV dominance is real and durable, but the $400M price tag and geopolitical export bans are creating the exact conditions for a viable competitor to emerge.
Why it matters
The company is the single chokepoint in advanced chip production worldwide. Control over ASML's machines shapes which nations can build cutting-edge AI hardware, making it as consequential as oil infrastructure in prior decades.
Do this week
Chip architects: benchmark your designs against the 8nm node specifications (company-reported) before Q4 roadmap locks, so you lock supply commitments before lead times stretch further.
ASML ships machines that etch 8-nanometer transistors
ASML, the Dutch lithography equipment maker, is now delivering its latest extreme-ultraviolet (EUV) lithography machine to chipmakers worldwide. The machine holds mirrors in atomic-precision alignment across 200 cubic meters of equipment and costs $400 million per unit (company-reported).
The new machine achieves 8-nanometer resolution—about 40 silicon atoms wide—compared to 13 nanometers on ASML's first EUV tools, which launched in 2017. Those original machines cost over $100 million each. The technology required 16 years and $10 billion in R&D, beginning around 2001 when ASML bet on EUV while competitors Nikon and Canon abandoned the approach.
EUV works by vaporizing molten tin tens of thousands of times per second, using lasers to generate extreme-ultraviolet light that bounces off precision-polished mirrors (Zeiss developed the mirror-inspection and polishing techniques). The light etches patterns onto silicon wafers in a vacuum chamber. Regular glass absorbs EUV; air absorbs it too.
Chipmakers—principally TSMC, Samsung, and Intel—will pay the $400 million asking price because they are locked in a race to shrink transistor features and pack more of them onto each chip. This density increase drives higher performance and lower power consumption, extending Moore's Law, which has governed chip improvement for decades.
ASML now ships roughly 50 EUV machines annually (company-reported, 2025 figures) and pulled in nearly $40 billion in revenue in 2025. The company's market capitalization exceeded half a trillion dollars at press time. It holds approximately 90% of the global lithography tool market (company-reported).
AI demand bought ASML time it didn't expect
When ASML's first EUV machines appeared in 2017, industry observers questioned whether demand would materialize. Lithography vendors had developed clever workarounds to extend older deep-ultraviolet technology, such as immersion lithography, which uses water layers to focus light more narrowly. EUV might not be needed for years.
That calculation broke in 2022 and 2023. OpenAI released GPT-3 and then ChatGPT. AI demand exploded. Google, Meta, OpenAI, Anthropic, and others raced to build server farms for training and deploying large language models. They bought Nvidia GPUs at $40,000 per unit and demanded chips tailored for AI workloads. EUV made it possible to design and manufacture those chips faster and with higher density than older methods allowed.
The geopolitical dimension is now inescapable. ASML is the single source of advanced lithography equipment. The U.S. government pressured the Dutch government to ban ASML from selling high-end machines to Chinese firms starting in 2019. This embargo aims to prevent China from developing cutting-edge AI chips.
China's government has responded by investing billions in building its own EUV machine. Reuters reported in early 2025 that a government-backed program employing former ASML engineers built a machine so large it filled an entire laboratory floor. Its production capability and efficiency remain unclear. Experts estimate that even an inefficient domestic machine—outputting one wafer per hour instead of ASML's 200 per hour—would enable China to build a large fab and reduce dependence on Western equipment.
The monopoly has also attracted startup competitors. Substrate, a lithography startup founded by James Proud, is openly targeting ASML's territory, citing the "dangerously reliant" and "very expensive" supply chain in public messaging. Substrate aims to build cheaper, smaller, or more capable machines than ASML's.
The bottleneck is real and shifting
For the next 3-5 years, ASML's grip on advanced chip production is unshakeable. The company has no near-term rival in EUV performance or scale. But the conditions for disruption are assembling: price ($400 million is not defensible forever), geopolitical risk (export bans create strong incentive for alternatives), and technical feasibility (the core physics of EUV is no longer unknown).
Chipmakers and system architects should not assume ASML's current leadership will persist without competitor pressure. Supply commitments made today lock in 2-3 year leadtimes. Diversifying equipment sourcing—even if alternatives start at lower yields—reduces single-source risk and may offer negotiating leverage with ASML on pricing and delivery schedules.