Macro
US loses semiconductor supremacy to ASML and Asia, highlighting strategic missteps and geopolitical challenges in chipmaking technology.
By Mackenzie Crow
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The United States, despite its early role in developing semiconductor technology crucial for today's artificial intelligence revolution, has seen its position erode. A Dutch company, ASML Holding NV, now monopolizes the production of extreme ultraviolet lithography (EUV) machines, essential for creating chips with significantly enhanced processing power. These chips are vital for AI platforms like OpenAI's ChatGPT and Google's Gemini. ASML's EUV technology, costing over $200 million per machine, has made it Europe's most valuable tech stock, with a market capitalization exceeding $350 billion. This shift underscores a strategic misstep by the US, which has allowed Asian manufacturers and a European firm to dominate a sector foundational to national economic security.
Intel Corp., once the world's leading chipmaker, played a pivotal role in this technological shift but ultimately fell behind due to strategic errors. The company's hesitance to adopt EUV technology, under the leadership of then-CEO Brian Krzanich, stemmed from doubts about the technology's economic viability. This decision proved costly as Taiwan Semiconductor Manufacturing Co. (TSMC), leveraging EUV technology, surpassed Intel technologically around 2018. Intel's attempt to use an alternative "multiple patterning" approach to chip lithography faltered, allowing TSMC and Samsung to advance further in semiconductor production.
The semiconductor technology race has significant geopolitical implications, particularly between the US and China. The US's partial funding of the underlying research for EUV technology, only to see it benefit its chief geopolitical rival, highlights the strategic complexities. China's efforts to secure its own EUV capacity underscore the technology's importance for military and industrial applications. The US has responded by tightening export controls and rallying allies to contain China's technological and military advancements. This semiconductor competition reflects broader tensions and the strategic importance of maintaining a lead in critical technologies.
Intel's response to its strategic misjudgment includes advocating for increased government support to bolster domestic semiconductor manufacturing. CEO Pat Gelsinger's push for the $280 billion chips bill in 2022, aimed at enhancing US chip production, reflects a broader industrial policy shift. However, Intel's foundry business struggles, with profitability not expected until the latter half of the decade, highlight the challenges of aligning political, economic, and technological objectives. The semiconductor industry's complexities, coupled with geopolitical competition, underscore the need for strategic foresight and robust policy support to maintain technological leadership.
"We went through great steps to avoid the need for EUV and, as you see, it produced deficiencies in power, performance, area and cost."
Finance GPT
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