After singing the praises of the global frictionless semiconductor ecosystem, in which every country or region has its own role to play, ASML somewhat reversed course and started supporting the EU’s ambitions to construct a leading-edge fab in Europe. Why?
“This is the most important man of the chip industry,” said Eurocommissioner Thierry Breton, pointing to ASML CEO Peter Wennink. Breton had traveled to Veldhoven to ask for support for his ambitions to establish a leading-edge fab on European soil. And he got it.
That was quite a surprise. In recent months, Wennink had expressed skepticism about Western plans to bring back semiconductor production. The top executive warned that breaking up the “global frictionless semiconductor ecosystem” built up over decades would drive up costs and slow down the pace of innovation. Countries shouldn’t worry about technological autonomy, they should focus on interdependence.
“It doesn’t matter that the Taiwanese or Koreans can do something very well, as long as we can do something else very well,” Wennink said in Dutch current affairs TV show Nieuwsuur. He told Politico that building a 2nm chip factory in Europe was on par with sending people to the moon.
It was an entirely reasonable position. Europe could invest billions in a fab, or it can use them to strengthen and expand existing European competences that other parts of the world would buy from us. Or the money could boost emerging technologies, such as integrated photonics, quantum technology and artificial intelligence. Besides: which European company needs large quantities of leading-edge chips? It’s not like we have a thriving fabless sector either.
Wennink made another good point in Nieuwsuur. You can set up a chip factory in Europe, but then “you only have one link in the production process, while dozens of links are needed.” Design, design tools, materials, production machines, the packaging step: if Europe really wants to be self-sufficient in chip production, it has to import all those things. Wennink stopped short of calling it completely unfeasible, but he clearly didn’t think it was going to happen.
Considering these statements, you wouldn’t expect Wennink to back Breton. But he did. At the press conference in Veldhoven, the ASML CEO denied that he had changed his mind, however. Construction of a European fab wouldn’t mean breaking up the ecosystem, but would contribute to a sensible geographical distribution of the world’s leading-edge semiconductor manufacturing capacity. And if Europe takes on a partner like TSMC or Intel, as Breton intends to, then building that moon rocket won’t be that hard after all.
Wennink even said that the Eurofab would be “a very profitable investment.” Thanks to the ongoing digitalization, the European tech industry will soon develop a great need for sub-5nm chips, too. Just like TSMC and Samsung are currently building chip factories near their major US customers, they’ll want a presence in Europe.
These are entirely reasonable points too, but clearly Wennink did change his tune a little. The question is: why? What would ASML gain from a European fab? Most likely, Wennink shifted his grounds to create goodwill with the European Commission. Now that ASML is being subjected to geopolitical forces, good relations with Brussels are essential – unlike the Netherlands, the EU could make a fist on the world stage (though it rarely does). Wennink is possibly even trying to prevent ASML from being used as a power play pawn. Previously, German newspaper Handelsblatt called the Veldhoven-based company Europe’s “most important trump card” in the global battle for electronic components. Bearing in mind Breton’s flattering words, the EC understands this all too well.
Up until now, ASML has tried to distance itself as much as possible from the global battle for technological dominance. That was simply untenable, considering the fact that the company has completely cornered the semiconductor lithography equipment market. It’s a bit late, but it’s a smart move to seek geopolitical shelter.