ASML CEO Christophe highlights the dominance of the US in AI chip development and warns that Europe risks losing technological sovereignty by remaining a consumer rather than a producer of AI technology. He also emphasizes the complex relationship with China, noting that cutting off China from advanced AI chips could backfire by prompting China to develop its own technologies, thus challenging Western market leadership.

In the discussion, ASML CEO Christophe highlights the current dominance of the United States in the AI chip ecosystem, citing companies like Nvidia, Google, Meta, and Microsoft as key drivers of AI development. He notes that about 80% of the most advanced chips are purchased in the US, underscoring the strength of the American AI ecosystem. In contrast, Europe is described as primarily a consumer of AI technology rather than a producer, with a weak AI ecosystem and minimal semiconductor manufacturing presence.

Christophe points out that Europe’s semiconductor market is very small, accounting for only about 1-2% of ASML’s shipments over the past decade. This lack of advanced semiconductor manufacturing is attributed to low consumption of advanced chips within Europe and the absence of major AI chip developers in the region. To catch up, Europe needs to create favorable conditions to attract the entire semiconductor and AI ecosystem back to the continent, which is currently lagging behind both the US and China.

The CEO expresses concern about Europe’s future if it continues to fall behind in AI technology, warning that the continent risks becoming merely a consumer of technology rather than a creator. This situation could undermine Europe’s technological sovereignty, as having control over the entire AI ecosystem is crucial for maintaining independence. Christophe emphasizes that sovereignty requires active participation in all parts of the ecosystem, not just consumption or data center hosting.

Regarding China, Christophe acknowledges the complex interdependencies between China, the US, and Europe, especially in supply chains involving rare earths and legacy chips. He suggests that Europe should work to diversify its supply chains to reduce dependence on China while keeping markets open to maintain global trade flows. ASML continues to see China as a significant market and advocates for providing technology to China, albeit with some restrictions on the most advanced tools.

Finally, Christophe discusses the delicate balance in technology export restrictions to China. He notes that China will not accept being cut off from AI technology due to its large population and ambition to advance. Currently, the technology ASML ships to China is about eight generations behind the latest tools used in the West, which slows China’s progress. However, pushing China too far behind risks encouraging them to develop their own technologies independently, potentially leading to lost market share for Western companies in the long term. The key question remains how far the West wants to delay China’s technological advancement without provoking unintended consequences.