The Bloomberg Tech Europe segment offers an in-depth look at ASML, the Dutch company at the heart of the global AI and semiconductor revolution. ASML is the only company capable of producing extreme ultraviolet (EUV) lithography machines, which are essential for manufacturing the most advanced computer chips used in devices ranging from smartphones to AI systems like ChatGPT. These machines, costing over $300 million each and containing more than 100,000 parts, enable chipmakers to etch microscopic circuits onto wafers, packing billions of transistors into tiny spaces. ASML’s technology underpins the work of leading semiconductor firms such as NVIDIA, AMD, and Micron, and its machines are critical to maintaining the pace of innovation described by Moore’s Law.

ASML CEO Christophe Fouquet highlights the company’s ongoing innovation efforts, including the transition to high numerical aperture (High NA) EUV machines aimed at producing chips smaller than two nanometers, which are crucial for future AI applications. Fouquet also discusses advanced 3D packaging techniques that stack components vertically to further increase transistor density, a necessity as AI chip demands grow exponentially—surpassing traditional Moore’s Law expectations. ASML’s significant investment in AI, including a $1.5 billion stake in European AI startup Mistral, reflects the company’s belief in AI’s potential to improve its own product development and operational efficiency.

The interview also addresses the broader AI race, with Fouquet emphasizing that the United States currently leads, driven by companies like NVIDIA, Google, Meta, and Microsoft, while China is aggressively trying to catch up. Europe, by contrast, is falling behind, largely because it lacks a strong AI ecosystem and semiconductor manufacturing base. Fouquet warns that Europe risks becoming merely a consumer of AI technologies developed elsewhere unless it creates conditions to attract and grow the entire semiconductor and AI ecosystem domestically. He stresses the importance of sovereignty in technology and the need for Europe to play a more active role in the AI supply chain.

Geopolitical tensions, particularly involving China, pose significant challenges for ASML. The company faces restrictions on selling its most advanced machines to China, with the Dutch government imposing export controls to limit China’s semiconductor development. Fouquet explains the delicate balance between restricting China’s access to cutting-edge technology and the risk that China will develop its own capabilities independently, potentially becoming a competitor in the long term. Despite these challenges, China remains a major market for ASML, accounting for a significant portion of its sales, though this share is expected to decline due to political pressures.

Finally, the segment explores ASML’s competitive landscape and future prospects. While ASML currently holds a near-monopoly on EUV lithography technology, competitors in China and startups in the U.S. are attempting to catch up, though they remain years behind. The company’s dominance is supported by decades of research and close collaboration with customers and suppliers. However, maintaining this lead requires continuous innovation and navigating complex geopolitical dynamics. ASML’s CEO expresses concern about Europe’s position in the global AI and semiconductor race but remains committed to keeping the company headquartered in the Netherlands and advancing its technology to meet future demands.