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ASML seems to strike deep at personal identities: it's the only European player in space dominated by American and Asian companies. Every time anyone mentions

by wenc 2y ago

ASML seems to strike deep at personal identities: it's the only European player in space dominated by American and Asian companies. Every time anyone mentions ASML, I see comments of adulation. It's a very human tendency to hero-worship, especially fanboys who only recognize the name but don't understand the history or the ecosystem. It's useful to remember that ASML didn't outcompete rivals through brilliant innovation in a heated market race. Instead it won mostly by being the last one standing. All the other players dropped out. Nikon and Canon made strategic decisions not to pursue EUV because it was too risky and expensive. ASML, a small Phillips spinoff, couldn't do it alone either. It took two decades and billions of investments backed by Intel and TSMC to keep ASML going before the first breakthrough -- it was a lot of persistence and incrementalism. ASML was essentially a side bet/strategic hedge by Intel, TSMC and Samsung. (all this is covered on Asianometry) People associate ASML with the Netherlands, but it would not have been possible without the massive contributions of the Americans, the Taiwanese, the Germans, and the Japanese. It's like Grigori Perelman and the Poincare conjecture -- he didn't accept the Fields Medal for it because he felt that he just happened to the last person to put the pieces together (he was building on work by Thurston, Hamilton, etc.). We see ASML as this amazing Dutch company, but we forget all the other players were critical to making this singular company possible (only because it happened to be the only one standing, not because no one else is capable -- this is the great misconception).

codeulike 2y ago
Fair enough, I can see it was a team effort. But its still interesting that all that work has focused on one place without leaking and it now has global strategic importance. And being the last one standing must mean something - good at negotiating with funders, tenacious, perceived as a good long term bet etc.
- Tade0 2y ago
  For a long time the Netherlands were somewhat of a tax haven for companies relying heavily on R&D.
ojl 2y ago
It seems for some reason that it’s only important to keep these things in mind and mention that it contains American tech, is an international effort, etc, when discussing some successful European company. But when discussing American companies there is never any talk about such things. Why can’t ASML be seen as an amazing Dutch company even if they also use tech from other countries?
- wenc 2y ago
  Because it's not the case. ASML is truly an international integration company. This type of integration requires deep expertise and tacit knowledge. But they don't manufacture most of their critical components. The way most narratives make it sound is that ASML is out of this world. No, it is not. It is unique because it is the only one standing in the market, after a 2 decade period of investment. It has a compelling moat, but that moat is not entirely technical (though it is substantially technical -- there is a lot of tacit knowledge on integration at that level of precision). It's the supplier network lock in, and sunk cost lockin from chipmakers.
- phatfish 2y ago
  The American companies that get talked about most here are mainly software companies. The "supply chain" for software is far less interesting and easily hidden away. Who cares about a litany of Indian outsourcing companies (apart from those who were outsourced i suppose)?
  - tmnvdb 2y ago
    Their supply chains consists of Indian and Chinese Univerities.
impossiblefork 2y ago
The system is Dutch. Any component of anything is always trivial. If the Dutch want to design a new EUV light source, they can probably find someone to do it. If they want to find someone to grind mirrors to match those from Zeiss, maybe they can find someone who worked on the ESO or similar, and similarly with everything else. Think of it like how the F-35 is a Boeing project, even though many companies make components. The integrator is the maker, not the component manufacturers. I don't think the US could have made something like ASML. Baumol effect due to the successful firms, different attitudes, etc. There's after all a reason why the others dropped out.
- tmnvdb 2y ago
  My impression is one important strategic factor is that ASML was not build using venture capital -in which the US is dominant - but relied mostly on government subsidies. Once ASML was a strong player they got a lot of investment from American customers (intel et al) to invest, for example in UEV development. This is a funding approach that doesn't work well in most markets but seems to fit well with the deep speculative research typical of these kinds of systems. As some other users have noted, the US was the initial leader in UEV research (in the very early phases), but the technology was deemed too speculative to attract significant market funding.
  - impossiblefork 2y ago
    Yes. Especially Germans can make these kinds of long-terms plans. I saw one thing that made it obvious to me that they were only people who could possibly develop a certain technology which hasn't been commercialized. Basically, they were doing research on details that they from their analysis could determine were necessary, but which nobody else had even thought about yet. It took me half an hour of a guy who had done his PhD on it explaining until I understood why they needed it. I think his work was paid for by industry though.
    - tmnvdb 2y ago
      ASML is not German, and I'm not sure I understand the rest of your comment.
_fizz_buzz_ 2y ago
> It's useful to remember that ASML didn't outcompete rivals through brilliant innovation in a heated market race. Instead it won mostly by being the last one standing. They were the last one standing because of their brilliant innovation. It was order of magnitudes harder to get EUV from the lab to an actual working machine than anybody thought in the beginning. There is a reason others gave up.
tmnvdb 2y ago
You’re partly right, but I think you’re downplaying ASML’s achievements, especially when it comes to EUV. The ‘internationalization’ you mentioned was definitely one of the key reasons for their success. They were smart to position themselves as a global system integrator early on, stepping away from the vertical integration that their competitors mostly stuck with. (And let’s not forget, ASML was already a big player before EUV even became a thing.) That said, this isn’t something unique to ASML. It’s just how global companies operate, especially in hardware. Take Tesla as an example—these companies are inherently multinational. They rely on acquired patents, parts and expertise from around the world, and hire international talent to stay competitive. As someone else pointed out, it’s interesting how often this comes up in ASML discussions here, especially from American users. Maybe it’s because admitting reliance on another country—particularly those “arrogant Europeans” Americans often feel both superior and insecure about—kind of messes with the U.S. dominance narrative.

by wenc 2y ago

codeulike 2y ago

Fair enough, I can see it was a team effort. But its still interesting that all that work has focused on one place without leaking and it now has global strategic importance. And being the last one standing must mean something - good at negotiating with funders, tenacious, perceived as a good long term bet etc.

Tade0 2y ago
For a long time the Netherlands were somewhat of a tax haven for companies relying heavily on R&D.

ojl 2y ago

It seems for some reason that it’s only important to keep these things in mind and mention that it contains American tech, is an international effort, etc, when discussing some successful European company. But when discussing American companies there is never any talk about such things. Why can’t ASML be seen as an amazing Dutch company even if they also use tech from other countries?

wenc 2y ago
Because it's not the case. ASML is truly an international integration company. This type of integration requires deep expertise and tacit knowledge. But they don't manufacture most of their critical components. The way most narratives make it sound is that ASML is out of this world. No, it is not. It is unique because it is the only one standing in the market, after a 2 decade period of investment. It has a compelling moat, but that moat is not entirely technical (though it is substantially technical -- there is a lot of tacit knowledge on integration at that level of precision). It's the supplier network lock in, and sunk cost lockin from chipmakers.
phatfish 2y ago
The American companies that get talked about most here are mainly software companies. The "supply chain" for software is far less interesting and easily hidden away. Who cares about a litany of Indian outsourcing companies (apart from those who were outsourced i suppose)?
- tmnvdb 2y ago
  Their supply chains consists of Indian and Chinese Univerities.

impossiblefork 2y ago

The system is Dutch. Any component of anything is always trivial. If the Dutch want to design a new EUV light source, they can probably find someone to do it. If they want to find someone to grind mirrors to match those from Zeiss, maybe they can find someone who worked on the ESO or similar, and similarly with everything else. Think of it like how the F-35 is a Boeing project, even though many companies make components. The integrator is the maker, not the component manufacturers. I don't think the US could have made something like ASML. Baumol effect due to the successful firms, different attitudes, etc. There's after all a reason why the others dropped out.

tmnvdb 2y ago
My impression is one important strategic factor is that ASML was not build using venture capital -in which the US is dominant - but relied mostly on government subsidies. Once ASML was a strong player they got a lot of investment from American customers (intel et al) to invest, for example in UEV development. This is a funding approach that doesn't work well in most markets but seems to fit well with the deep speculative research typical of these kinds of systems. As some other users have noted, the US was the initial leader in UEV research (in the very early phases), but the technology was deemed too speculative to attract significant market funding.
- impossiblefork 2y ago
  Yes. Especially Germans can make these kinds of long-terms plans. I saw one thing that made it obvious to me that they were only people who could possibly develop a certain technology which hasn't been commercialized. Basically, they were doing research on details that they from their analysis could determine were necessary, but which nobody else had even thought about yet. It took me half an hour of a guy who had done his PhD on it explaining until I understood why they needed it. I think his work was paid for by industry though.
  - tmnvdb 2y ago
    ASML is not German, and I'm not sure I understand the rest of your comment.

_fizz_buzz_ 2y ago

> It's useful to remember that ASML didn't outcompete rivals through brilliant innovation in a heated market race. Instead it won mostly by being the last one standing. They were the last one standing because of their brilliant innovation. It was order of magnitudes harder to get EUV from the lab to an actual working machine than anybody thought in the beginning. There is a reason others gave up.

tmnvdb 2y ago

You’re partly right, but I think you’re downplaying ASML’s achievements, especially when it comes to EUV. The ‘internationalization’ you mentioned was definitely one of the key reasons for their success. They were smart to position themselves as a global system integrator early on, stepping away from the vertical integration that their competitors mostly stuck with. (And let’s not forget, ASML was already a big player before EUV even became a thing.) That said, this isn’t something unique to ASML. It’s just how global companies operate, especially in hardware. Take Tesla as an example—these companies are inherently multinational. They rely on acquired patents, parts and expertise from around the world, and hire international talent to stay competitive. As someone else pointed out, it’s interesting how often this comes up in ASML discussions here, especially from American users. Maybe it’s because admitting reliance on another country—particularly those “arrogant Europeans” Americans often feel both superior and insecure about—kind of messes with the U.S. dominance narrative.