The U.S. government is really worried about China’s ambitions when it comes to making microchips. But so far - China has NOT gotten its hands on a very important machine sold by just ONE company. How Taiwan Semiconductor Manufacturing Company makes over 90% of the smallest and the most sophisticated chips in the world. Their semiconductor chips power everything from fridges to F-35 fighter jets. In other words, they make civilization function.

Some People pointed out that TSMC cannot make their chips without one  piece of equipment. And it’s true. TSMC cannot make its chips without a $150 million dollar machine from a Dutch company called ASML.

ASML’s high-end equipment prints the tiny features that form the basis of TSMC’s microchips. Microchips are made by building up billions of tiny transistors. An ASML machine patterns the finest lines on the microchips using a method called lithography.

The projection system shrinks and focuses the pattern onto a silicon wafer. After the pattern is printed, it moves the wafer slightly and makes another copy on the wafer. They are built up layer by layer, like layering a cake except   MUCH more complicated because this involves up to 100 layers with nanometer precision. The more transistors that can be added to a chip, the more powerful the chip becomes.

ASML is the only company in the world that makes the machine need to print advanced microchips. It manufactures the equipment at its factories in Veldhoven, Netherlands. The company was founded in 1984 as a joint venture between the electronics giant Philips and the Dutch chip-machine manufacturer ASM International. ASML is now an independent company.

It has a monopoly on EUV lithography, “extreme ultraviolet light” - an extremely short wavelength of light that can create even tinier circuitry than is possible with conventional lithography which relies on Deep UV. (DUV) EUV light doesn’t occur naturally on earth – only in outer space. So ASML must generate it somehow.

To generate the light, a CO2 laser fires two laser pulses at a drop of tin, vaporizing it. The tin vapor becomes plasma which emits EUV light. This happens at a rate of 50,000 times a second! The machines are assembled in clean rooms containing zero dust. These rooms are 10,000 times cleaner than outside air. Even the smallest speck of dust that ends up on a wafer can ruin it. The company’s decision to switch to EUV light in the nineties gave it an astounding advantage.

It cost billions of dollars to make the radical switch in light sources, but the effort has paid off big time. ASML is now valued at around $193 billion dollars. The EUV equipment is sold to the largest chipmakers in the world: TSMC, Samsung, and Intel.

Every one of its machines has over 100,000 parts. They’re shipped in 40 freight containers, 20 trucks, and three Boeing 747s. Like the rest of the world, China also relies on ASML machines for Chinese companies that are producing semiconductor chips.

But in 2019, the Trump administration successfully lobbied the Dutch government to block shipments of ASML’s most sophisticated machines to China, and the Biden administration has shown no signs of reversing that policy.

However, ASML is NOT restricted from exporting slightly older technology to China. ASML’s older deep ultraviolet (DUV) systems are a generation behind the EUV ones but still, the most common way to make less advanced chips. In 2021, 16% of ASML’s sales went to China, around $2.2 billion dollars worth. The company expects similar figures for 2022.

Washington has been trying to hamper China’s chip-making progress in many ways. When President Biden signed the CHIPS Act in August, it included a caveat that if TSMC or other chip companies want billions in U.S. subsidies for building new plants in America, they have to agree not to sell their most advanced chips to China.

Washington has also been pushing ASML even to stop shipping its less sophisticated chip-making machines to China. This could deal a serious blow to Chinese company SMIC which has reportedly been making 7-nanometer semiconductor chips that are only a generation behind the 5-nanometer ones manufactured by TSMC and Samsung.

If Washington gets its way, even ASML’s older lithography equipment could be banned from China. China could start producing its own lithography systems if it wants to become self-reliant. However, analysts believe it would take China at least a decade to build its own equipment that could rival ASML’s.

ASML’s CEO Peter Wennink believes it will be difficult but not impossible. He says: "I am not saying it cannot be done, because I know the laws of physics are the same in China as they are here. Never say never. They will certainly try."

Sophisticated machines like lithography the system cannot be built without brilliant engineers who have mastered STEM.

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