In the particularly complex world of semiconductors, ASML and ASM International are two of the most strategic companies in the European technology market. The first weighs ten times more than the second, but the latter has achieved three times greater stock market performance since the 2020 pandemic. What are their differences? Their strengths? Let’s explore this together.
The origins of ASML date back to 1984. The company was born from a joint venture between Philips and ASMI (for Advanced Semiconductor Materials International). Yes, you read that right, Philips. The same company which, today, no longer makes many people dream, except perhaps a few dividend aficionados or speculators playing a turnaround. In the 1970s, Philips was a huge conglomerate with a presence in diverse sectors: audiovisual, lighting, health systems (the branch it retained), and even in football with the PSV club. Eindhoven, whose acronym stands for Philips Sport Vereniging Eindhoven.
The beginnings were difficult. ASML needed significant financial support to meet its heavy R&D expenses. After gaining independence from ASM International, the group held on, although it made a poor showing in the lithography market in the 1990s, where market share was mainly held by the Japanese Nikon and Canon. But over the years, ASML has proven itself to be formidable in its ability to innovate and improve its technology.
Today, ASML has a virtual monopoly on lithographic machines. But what is lithography in the world of chips? Lithography is a manufacturing process for etching precise patterns onto silicon wafers. This process uses ultraviolet light to expose a layer of photoresist, a photosensitive material, through a mask containing the pattern to be reproduced. The exposed areas are then expanded and chemically etched to create fine structures, like transistors and interconnects, that make up electronic chips.
Lithographic machines are ultra-complex. The unit price easily exceeds 150 million euros. They are simply essential for designing the chips essential to the operation of phones, electric vehicles, security systems, medical equipment, network solutions and, of course, artificial intelligence.
Indeed, the graphics processing units, the famous Nvidia GPUs, essential for AI models, are produced by the Taiwanese TSMC. TSMC, in turn, relies on ASML lithography machines to produce these chips. You therefore understand why ASML is a company of global strategic importance. In this sense, it also includes a political risk that should not be overlooked: China represents a little more than a quarter of its turnover, and the United States is monitoring this closely with a view to limiting China’s access to sensitive technologies.
Technologies sold by ASML
ASML produces several lithography technologies that use ultraviolet light to etch microscopic patterns onto silicon wafers and create complex chips. Among these technologies, the big difference is in the wavelength of light used. EUV (Extreme Ultraviolet Lithography) machines are the most precise (13.5 nanometers). It is the most complex and expensive technology. The other machines (excluding L-line) belong to DUV (Deep Ultraviolet) technology, which refers to shorter wavelengths, typically between 190 and 250 nanometers. This does not mean that DUV machines are marginal, quite the contrary. If EUV makes it possible to produce very high resolution chips, DUV allows mass production, which is less demanding but just as essential. In addition, DUV has been used for the production of semiconductors for several decades: it is therefore considered reliable and versatile.
ASML’s machines are intended to produce two large families of semiconductors: logic chips (the “brains” which process information in electronic devices) for 58% of turnover, and memory chips. (to store large amounts of data in very small areas) for 22%. The rest of the turnover is recurring: it comes mainly from the maintenance and upkeep of the installed base of machines.
ASM International
-ASM International operates in the semiconductor wafer manufacturing equipment market. The company offers filing tools in very specific areas.
Its main product line is ALD (Atomic Layer Deposition). ALD accounts for almost half of the company’s sales. This is the most advanced type of deposition, because as transistors shrink, increasing precision, now in the atomic range, is required to create ultra-thin films on wafers ( silicon wafers).
ASMI is also specialized in silicon epitaxy and silicon carbide epitaxy (since the acquisition of the Italian LPE in 2022), constituting the second major product line. These solutions include the deposition of layers that serve specific purposes in complex chip manufacturing processes. The big difference between silicon and silicon carbide epitaxy is that the latter, which combines silicon and carbon, is adapted to withstand higher temperatures and voltages, making it ideal for extreme environments. Its use is, for example, very widespread to improve the capacities of electric vehicle batteries. Silicon carbide epitaxy is a fast-growing market, with an expected compound annual growth rate (CAGR) of over 30% by 2028.
Finally, ASM International is also active in the market for vertical ovens (such as the Sonora or the A400 DUO), which are used for the heat treatment of silicon wafers. These ovens are used for processes such as the diffusion of dopants to modify the electrical properties of silicon, oxidation to create layers on the surface of the material, annealing to repair the crystal structure of materials, or the deposition of thin layers via processes such as PECVD (Plasma Assisted Chemical Vapor Deposition). These vertical ovens should not be confused with lithography machines which are used to engrave patterns on wafers.
SONORA vertical furnace marketed by ASM International to carry out heat treatment of silicon wafers (source: ASM International)
ASML vs ASM International: what are the differences?
On the one hand, we therefore have ASML, with a market capitalization of 295 billion euros, specialist in lithography machines. On the other, ASM International, with a capitalization of 30 billion euros, operating in various specialties used for chip production. Both companies are Dutch and highly strategic thanks to the extremely cutting-edge and complex technologies they market. They also have a historical link, even if they no longer have shareholders. ASML was born from a joint venture between ASMI and Philips.
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