Since the publication of the OODA Stratigame  – Scenario Planning for Global Computer Chip Supply Chain Disruption – Netherlands-based ASML Holding has always figured prominently in our tracking and has been central to many of the export control controversies in the ongoing “Chip Wars.”  Why?  ASML was the singular global supplier of extreme ultraviolet (EUV) lithography machines vital to the production of a particular type of high performance semiconductor.  It has been clear for a few years new competition and solutions to broaden this production capability globally was crucial to all future global computer chip supply chain scenarios.  Japan-based Canon has entered the field.  Details here.

Canon’s new technology competes with ASML in chip manufacturing

“The new system, FPA-1200NZ2C, can produce 5 nanometer semiconductors and scale down to 2 nm, surpassing the capabilities of the A17 Pro chip found in Apple’s iPhone 15 Pro and Pro Max.”

As reported by CNBC and Cointelegraph:

According to a report from CNBC, Canon’s recently introduced “nanoimprint lithography” system represents the company’s competitive response to Dutch firm ASML, a dominant force in the extreme ultraviolet (EUV) lithography machine sector. ASML’s machinery is essential for producing cutting-edge chips, including those used in the latest Apple iPhones.

The utilization of these machines has been drawn into the technological conflict between the United States and China. The U.S., employing export restrictions and diverse sanctions, has aimed to obstruct China’s access to crucial chips and manufacturing machinery, hampering the progress of the world’s second-largest economy in a field where it is already perceived as lagging.

ASML’s EUV technology has gained significant traction among leading chip manufacturers due to its crucial role in enabling the production of semiconductors at 5 nanometers and below. This nanometer measurement pertains to the size of chip features, with smaller values accommodating more features on a chip, consequently enhancing semiconductor performance…The Dutch government has imposed restrictions on ASML, preventing the export of its EUV lithography machines to China, where no units have been shipped. This limitation exists due to the critical role of these machines in the production of cutting-edge semiconductor chips.  With Canon’s assertion that their new machine can facilitate the production of semiconductors equivalent to 2nm, it is likely to face increased scrutiny.

Cointelegraph reported earlier that the Biden administration is targeting a loophole that has allowed developers in China to purchase chips from the infamous Huaqiangbei electronics area in Shenzhen, a city in southern China.  However, China has released draft security regulations for companies providing generative artificial intelligence services, encompassing restrictions on data sources used for AI model training.

The ASML Case Study

Netherlands-based ASML Holding Remains the Central Player in the Global Chip Supply Chain:  A very specific insight from our OODA Network Stratigame – Scenario Planning for Global Computer Chip Supply Chain Disruption was the role the foreign production of Specialized Manufacturing Equipment (SME) built for the manufacturing of computer chips would play in the health of the computer chip supply chain for the U.S.  ASML Holding remains the vital tracking mechanism for indicators in the ongoing “Chip Wars” between China, the EU, the U.S., and Japan.  Following are our most recent OODA Loop News Briefs on ASML Holding, followed by a specific story on the market workaround ASML Holdings is considering with some of its hardware to continue to sell into the Chinese market.  We also provide further resources at the end of this post on the “Origins Story” of export controls which put ASML Holdings’ unique and vital EUV Chip Machines and Deep Ultraviolet Lithography (DUV) tool at the center of the global great power competition over semiconductor manufacturing, SME and component part supply chain availability.

Semiconductor Supply Chain Espionage: Data Stolen from ASML’s Technical Repository for EUV Chip Machines:  The weaponizing of the semiconductor supply chain (in the form of stolen data from an ASML SME technical repository for the abovementioned EUV lithography machines ) may impact the future of the global IT supply chain.

The ASML Holding’s Factory Fire and Specialized Manufacturing Equipment for Semiconductor Production:  The OODA Loop News Brief Team surfaced a story earlier today – Fire at vital tech factory could worsen global computer chip shortage – which we thought was important enough to provide further in-depth analysis.

Further OODA Loop News Briefs and Original Analysis on ASML can be foud at OODA Loop | ASML

Additional Resources

Computer Chip Supply Chain Vulnerabilities: Chip shortages have already disrupted various industries. The geopolitical aspect of the chip supply chain necessitates comprehensive strategic planning and risk mitigation. See: Chip Stratigame

The Inevitable Acceleration of Reshoring and its Challenges: The momentum towards reshoring, nearshoring, and friendshoring signals a global shift towards regional self-reliance. Each region will emphasize local manufacturing, food production, energy generation, defense, and automation. Reshoring is a complex process, with numerous examples of failures stemming from underestimating intricacies. Comprehensive analyses encompassing various facets, from engineering to finance, are essential for successful reshoring endeavors. See: Opportunities for Advantage

Embracing Corporate Intelligence and Scenario Planning in an Uncertain Age: Apart from traditional competitive challenges, businesses also confront external threats, many of which are unpredictable. This environment amplifies the significance of Scenario Planning. It enables leaders to envision varied futures, thereby identifying potential risks and opportunities. All organizations, regardless of their size, should allocate time to refine their understanding of the current risk landscape and adapt their strategies. See: Scenario Planning

Economic Weakness in China: China’s economy faces dim prospects exacerbated by disasters, COVID-19, and geopolitical tensions. Amid limited financial transparency, some indicators suggest China’s economic growth is severely stunted, impacting global economic stability. See: China Threat Brief

Technology Convergence and Market Disruption: Rapid advancements in technology are changing market dynamics and user expectations. See: Disruptive and Exponential Technologies.

Track Technology Driven Disruption: Businesses should examine technological drivers and future customer demands. A multi-disciplinary knowledge of tech domains is essential for effective foresight. See: Disruptive and Exponential Technologies.