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 chip designs of industry giants such as NVIDIA, AMD, and Apple, and is critical to maintaining the pace of innovation described by Moore’s Law.

ASML CEO Christophe Fouquet highlights the company’s ongoing innovation, particularly the transition from current EUV machines to higher numerical aperture (High NA) systems, which will allow chip production at scales below two nanometers. This advancement is crucial for future AI applications requiring even greater transistor density. Fouquet also discusses the importance of advanced 3D packaging technology, which stacks components vertically to further increase transistor density beyond traditional lithography limits. ASML’s significant investment in AI, including a $1.5 billion stake in European AI company Mistral, reflects its commitment to leveraging AI to improve its own product development and operational efficiency.

The interview reveals Fouquet’s perspective on the global AI race, emphasizing that the U.S. currently leads, with China making aggressive efforts to catch up, while Europe lags behind. He points out that Europe is primarily a consumer rather than a producer of AI technology, with minimal semiconductor manufacturing and consumption compared to the U.S. and Asia. Fouquet stresses the need for Europe to create conditions that attract the entire semiconductor ecosystem back to the continent to regain competitiveness. He also discusses the geopolitical complexities of supplying technology to China, noting that ASML ships older generation machines to China due to export restrictions, which slows China’s technological progress but also risks pushing China to develop its own capabilities independently.

The segment further explores ASML’s market dominance and competitive landscape. Despite geopolitical tensions and efforts by China to develop its own lithography technology through companies like Shanghai Microelectronics Equipment, ASML remains irreplaceable due to decades of development and close collaboration with customers and suppliers. While startups and Chinese firms are making progress, they remain years behind ASML’s advanced EUV technology. The company faces ongoing political pressures, especially regarding sales restrictions to China, which currently accounts for a significant portion of ASML’s revenue but is expected to decline due to these limitations.

Finally, the report touches on the broader implications of the AI and semiconductor arms race. Fouquet describes the massive investments by hyperscalers and governments as necessary to remain competitive, likening the situation to an arms race where falling behind means losing access to critical technology. He acknowledges the risks of rapid innovation cycles and market volatility but remains confident in ASML’s ability to maintain its leadership position. The segment concludes by noting ASML’s strategic importance in the global tech ecosystem and the challenges it faces in navigating geopolitical tensions while driving forward the next generation of chipmaking technology.