Chip – the missing piece in China’s ambition to become a technology powerhouse, the future depends on… 1 theft

Why does China “crave” ASML?

ASML was founded in 1984 and is currently headquartered in the Netherlands. The group is currently the largest supplier of photolithography systems to the semiconductor industry. Although not the only player in the industry, ASML has a monopoly in some key areas of the chip manufacturing industry.

Although not as famous as Intel, most semiconductor chip manufacturers in the world have to buy ASML machines. The company’s major customers include Intel, Samsung or TSMC, Apple’s manufacturing partner.

In the industry of manufacturing equipment for semiconductor circuit boards, although there are Nikon and Canon, ASML is the only corporation that has a monopoly on ultraviolet lithography (EUV) technology.

One of the most important stages of chip manufacturing is the creation of extremely small engravings, only a few tens of millions of parts of the width of a human hair on the surface of the semiconductor, to create electrodes as well as the gates that control the current through them.

ASML is not the only company in the world today that manufactures photolithography machines that do that, but its EUV technology is the only one that can use ultraviolet light with high intensity. wavelength is 13.3-13.7 nm. Shorter wavelengths allow smaller components to be mounted.

Thanks to this advanced technique, EUV allows the creation of transistors with a size 10 times smaller than current. Because of that, each EUV weighs 180 tons, about the same size as ASML’s double-decker bus, which costs up to 170 million USD.

Since competitors such as Canon and Nikon are not pursuing EUV technology, the world’s top 3 chip makers Intel, Samsung and TSMC are all dependent on ASML equipment, making the company a monopoly in the industry. branch.

With the technology that can produce 5-7nm chip making equipment, ASML of course becomes an enterprise that China is very “coveted” because this is a technology that the Asian power has not yet developed. be mastered.

Theft

Bloomberg reported that China, with its “Made in China 2025” strategy, has poured billions of dollars into developing chip technology, thereby gradually becoming ASML’s third largest market in 10 years. Many ASML joint ventures, factories and contracts with China have been made.

The idea that the story will continue like China copying Herrenknecht’s TBM (Tunnel Boring Machine) from Germany to reach the number 1 position in the world, or copying Apple’s technology in smartphones with Huawei and Xiaomi after a long time of cooperation. Everything suddenly fell apart because of a theft.

On February 16, ASML accused one of its former employees in China of stealing data related to the company’s proprietary technology.

While the West uses this as an excuse to pressure the campaign to block chip technology with China, ASML CEO Peter Wennick does not want that.

“Wennick is not happy about this at all. All he wants is more people to buy ASML machines, especially in a crowded market where the company has invested so much in investment like China,” said the expert. Societe Generale analyst Alexander Peterc said.

Gartner’s report shows that ASML accounts for more than 90% of the market share of semiconductor lithography, which has a total value of about 17.1 billion USD. ASML’s monopoly makes the West extremely worried when their technology can be restored similar to what happened with TBM or smartphones.

Meanwhile, CEO Wennick said that thanks to the huge revenue from China, the company has money to reinvest in developing its leading advanced technologies, not to mention the resources that ASML has invested in. for this billion-people market.

Wennick even warned that even if the West imposes an embargo on Chinese technology, it will eventually successfully produce advanced equipment, it’s only a matter of time.

“If they can’t buy these machines, they will develop their own. Even if it takes time, they will do it anyway,” said CEO Wennick.

So blocking the technology might backfire by cutting off ASML’s revenue stream for reinvestment, but in the end China still gets what it needs.

Copy war

Since 2013, ASML’s sales in China have suddenly increased dramatically, thereby helping the company’s stock to increase 10 times, becoming Europe’s most valuable technology company.

During the time when CEO Wennick took power, China also poured $ 45 billion in investment capital, creating favorable conditions and countless incentives for ASML. As a result, the company was able to open its software development branch in Shenzhen, a surveillance system factory in Beijing, and set up a branch office in Hong Kong.

ASML currently employs about 1,500 Chinese workers, including positions at its headquarters in the Netherlands.

According to ASML’s report, the recent theft took place in a technical archive containing details of the machine systems used to produce today’s most advanced chips.

Bloomberg’s source said the theft was just information theft and no hardware damage, especially since it has been going on for months. ASML side said it was investigating the incident and tightened security.

Previously, in 2022 and 2018, ASML had accused Beijing-based Dongfang Jingyuan Electron of stealing technology when an engineer stole 2 million lines of ASML source code to send to China.

ASML’s theft story takes place in the context of the Netherlands accepting to join the US to block Chinese chip development technology. Specifically, the Dutch government has banned ASML from exporting its most advanced photolithography equipment to China.

Bloomberg news agency said the latest theft makes it more likely that the Netherlands and the US will tighten the ban on ASML.

ASML’s side is concerned that these bans will affect the world chip industry, causing prices to rise, while China will anyway produce what it wants.

According to many analysts, tightening the embargo with ASML to the Chinese market could evaporate 4% of its revenue.

“We are just businessmen, not politicians. Copyright laws in China are the same as in the US, please get out of the way to let us do business,” CEO Wennick said.

*Source: Bloomberg, CNBC, WSJ