ASML and Foxconn Expansion
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kevinrequill
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ASML, the Dutch semiconductor equipment giant, maintains its monopoly on advanced chip manufacturing tools, while Foxconn is reportedly constructing the world's largest facility for Nvidia's GB200 superchips in Mexico, according to Reuters, highlighting the evolving landscape of global semiconductor production.
ASML's EUV Lithography Monopoly
ASML holds a unique monopoly in the semiconductor industry as the sole provider of extreme ultraviolet (EUV) lithography machines, which are essential for producing the world's most advanced computer chips
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. These machines, costing around $200 million each, are marvels of engineering complexity, containing over 100,000 components and requiring up to 200 engineers and 12 months to install2
. ASML's dominance in this niche has positioned it as a critical player in the global AI chips race, with its technology enabling the production of chips used by industry leaders like Nvidia, TSMC, and Intel3
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- EUV lithography allows for etching features down to one fifty-thousandth of a hair's width on silicon wafers3.
- ASML's success stems from decades of research, billions in investments, and strategic acquisitions like Silicon Valley Group (SVG) in 20014.
- The company's monopoly is reinforced by high barriers to entry, including the immense cost and technical challenges that deterred competitors like Nikon and Canon from pursuing EUV technology5.
- ASML's position is further strengthened by geopolitical factors, with the U.S. pressuring the Dutch government to limit ASML's sales to China, potentially affecting about a third of the company's revenues3.
5 sources
Foxconn's GB200 Superchip Facility
Foxconn, the world's largest contract electronics manufacturer, is constructing a massive facility in Guadalajara, Mexico, to produce Nvidia's GB200 superchips, a key component of Nvidia's next-generation Blackwell computing platform
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. This plant is set to be the largest GB200 production facility globally, reflecting the surging demand for advanced AI chips3
. The project underscores Foxconn's strategic pivot towards AI-related manufacturing and its efforts to diversify beyond consumer electronics assembly4
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The facility's construction in Mexico aligns with the broader trend of tech companies relocating supply chains closer to the U.S. market2
. While specific details such as investment amount and opening date remain undisclosed, Foxconn executives have emphasized the "very, very enormous" capacity of the plant and the "crazy" demand for Nvidia's Blackwell platform2
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. This move not only strengthens Foxconn's position in the AI chip market but also contributes to Mexico's growing semiconductor industry, supported by recent U.S.-Mexico semiconductor initiatives2
.4 sources
Impact of CHIPS Act on ASML
The CHIPS Act is poised to significantly benefit ASML, the Dutch semiconductor equipment manufacturer. As new chip-manufacturing facilities subsidized by the Act are established in the U.S., ASML is expected to see a steady stream of orders for its essential equipment
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. The Commerce Department has already announced over $20 billion in grants for new fabs from companies like TSMC, Intel, and Samsung, which are likely to rely on ASML's advanced lithography systems1
. This influx of U.S.-based projects could potentially offset any revenue losses ASML might face in China due to export restrictions1
. Additionally, ASML's CFO Roger Daasen has predicted "recovery for the industry in 2024 and...a stronger year in 2025," largely driven by these new American semiconductor manufacturing initiatives1
.1 source
Related
How will the CHIPS Act impact ASML's revenue from U.S. projects
What are the potential risks for ASML if the U.S.-China semiconductor tensions escalate
How might the exemption of allies from chip restrictions benefit ASML
What strategies is ASML employing to mitigate the impact of U.S. export controls
How significant is the role of the CHIPS Act in ASML's projected growth for 2025
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