ASML, Europe's Most Valuable Tech Firm, Is at the Heart of the US-China Chip War

The low-profile firm that has become crucial to a half-trillion-dollar global industry. From a report: In 1984, Martin van den Brink, a young Dutch engineer, joined a newly created venture in a quiet corner of the Netherlands. Little did he know then that about 40 years on the company would be so crucial to the $580 billion semiconductor industry that it would be the epicenter of a US-China chip war. ASML Holding NV, where Van den Brink is now the chief technology officer, practically owns the market for a critical piece of equipment needed to produce the brains of everything that makes modern life possible -- from cars and smartphones to computers, microwaves and airplanes. With the company's high-end machines churning out chips that can also go into state-of-the-art weapons and artificial intelligence devices, ASML is effectively being treated as critical infrastructure for US national security and has become a target of industrial espionage for China. "I never expected to be where we are today," said Van den Brink. Over his nearly four decades at the company, ASML has gone from a bit player competing with the likes of Nikon, Canon and Ultratech to the world's only maker of very high-end semiconductor lithography equipment. Its ascent has made it Europe's most valuable technology company, with a market capitalization of over $247 billion -- more than twice that of its customer Intel. In an industry where devices typically cost $10 million, ASML commands about $180 million for its current top-end machine. And although the chip market has softened recently, ASML is still growing and its long-term outlook seems intact, thanks to the insatiable demand for computing power. "This is a company that the world can't exist without," said Jon Bathgate, a fund manager at NZS Capital in Denver, which has about $2 billion under management, with ASML as one of its biggest holdings. "They've got a 20-year head start... Investors have clearly realized how important ASML is as a company and how difficult it would be to replicate. It's a natural monopoly with secular growth winds. That's unique." As chips become for geopolitics in the 21st century what oil was in the last one, ASML's singular success has thrust it squarely in the crosshairs of the intensifying tensions between the US and China. With the US focused on the strategic importance of semiconductors, Presidents Donald Trump and Joe Biden have done everything to ensure that China is a couple of generations behind in chips. No company is more critical to that effort than ASML.

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