How ASML, TSMC And Intel Dominate The Chip Market | CNBC Marathon
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ASML holds a monopoly on EUV lithography machines, crucial for producing advanced processor chips, with a new model priced at over $300 million. ASML's success stems from its revolutionary lithography technology, essential for modern chip production, with a limited number of customers who can afford machines priced at up to $200 million.
Insights
- ASML holds a monopoly on EUV lithography machines, crucial for producing advanced processor chips, with each machine costing up to $200 million, limiting the number of customers to major companies like Micron, SK Hynix, Samsung, Intel, and TSMC.
- ASML's revolutionary lithography technology, particularly its EUV systems, has significantly reduced competition, making it challenging for other companies to catch up, leading to its strategic growth plans projecting a 20% sales growth in the current year.
- The global chip shortage has impacted ASML's production and key customers, prompting them to expand capacity and ASML to prepare for increased production, while raising concerns about overreliance on a few key players in the chip supply chain, leading to initiatives like the U.S. Chips Act.
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Recent questions
What is ASML's role in chip production?
ASML holds a monopoly on EUV lithography machines, crucial for producing advanced processor chips. These machines are the most expensive step in chip production, costing up to $200 million each. ASML is the sole provider of this technology globally, with machines the size of a city bus but working with atomic precision. Amid a chip shortage, ASML's importance has surged, with its stock value rising significantly. ASML's machines are among the most complex devices ever made, with a new model priced at over $300 million. ASML's success stems from its revolutionary lithography technology, essential for modern chip production.
How does ASML's technology impact the chip market?
ASML's EUV machines use extreme ultraviolet light to print intricate chip designs with unparalleled precision. These machines are a critical component in chip fabrication, requiring meticulous engineering and physics expertise. ASML's machines are costly, with each machine priced at up to $200 million, limiting the number of customers who can afford them to five major companies: Micron, SK Hynix, Samsung, Intel, and TSMC. The global chip shortage has impacted ASML's production as suppliers struggle to deliver necessary components, hindering the manufacturing of more machines. ASML's key customers are expanding their capacity to address the chip shortage, with ASML preparing to increase production to meet the rising demand.
What are the growth plans for ASML?
ASML's strategic growth plans include a projected 20% sales growth in the current year and an annual revenue growth rate of 11% until the end of the decade. The company's focus on reducing the cost per transistor over the years has been a key factor in its success and will continue to drive its growth in the future. ASML's involvement in the global chip supply chain has raised concerns about overreliance on a few key players, prompting initiatives like the U.S. Chips Act and similar acts in other countries. ASML has established intricate relationships with nearly 800 suppliers, ensuring its dominance in the market and making it difficult for competitors to emerge.
How is TSMC addressing the chip shortage?
TSMC, a major player in chip manufacturing, is investing heavily to ramp up production, aiming to address the global chip shortage and maintain its position as a leading chipmaker. The company is constructing a five-nanometer fab in Arizona to cater to its U.S. customer base, with plans to recycle water and reduce environmental impact. TSMC is relocating top engineers from Taiwan to the U.S. to bolster its workforce and tap into a larger pool of analog designers. The U.S. government and industry are incentivizing chip manufacturing on U.S. soil to reduce reliance on foreign production. TSMC's expansion in the U.S. aims to enhance domestic chip manufacturing capabilities and alleviate global chip shortages.
What is Intel's strategy to address the chip shortage?
Intel's new CEO has a plan to address the global chip shortage by expanding operations in Oregon, New Mexico, Arizona, Ireland, and Israel. The company is investing $20 billion in new fabs in Arizona to produce chips for Amazon, Qualcomm, and others, aiming for self-sufficiency in the U.S. Intel's growth includes building new fabs in Oregon and Arizona, with a focus on clean rooms and advanced equipment to produce chips. The company is investing in water treatment facilities to manage the significant water usage in chip manufacturing. Intel is establishing a new business called Intel Foundry Services, aiming to manufacture wafers for customers like Amazon, Qualcomm, and the U.S. government, potentially reshaping the chip manufacturing landscape in the U.S.
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Summary
00:00
ASML: Monopoly on Advanced Chip Production Technology
- ASML holds a monopoly on EUV lithography machines, crucial for producing advanced processor chips.
- These machines are the most expensive step in chip production, costing up to $200 million each.
- ASML is the sole provider of this technology globally, with machines the size of a city bus but working with atomic precision.
- Amid a chip shortage, ASML's importance has surged, with its stock value rising significantly.
- ASML's machines are among the most complex devices ever made, with a new model priced at over $300 million.
- ASML's success stems from its revolutionary lithography technology, essential for modern chip production.
- The company's growth has been substantial, with CEO Peter Wennink leading a team of 32,000 employees.
- ASML's journey began in 1984 as a subsidiary of Philips, evolving into a key player in lithography technology.
- The company's EUV machines use extreme ultraviolet light to print intricate chip designs with unparalleled precision.
- ASML's machines are a critical component in chip fabrication, requiring meticulous engineering and physics expertise.
12:31
ASML's Dominance in Chip Manufacturing Industry
- ASML's EUV systems are costly, with each machine priced at up to $200 million, limiting the number of customers who can afford them to five major companies: Micron, SK Hynix, Samsung, Intel, and TSMC.
- The global chip shortage has impacted ASML's production as suppliers struggle to deliver necessary components, hindering the manufacturing of more machines.
- ASML's key customers are expanding their capacity to address the chip shortage, with ASML preparing to increase production to meet the rising demand.
- ASML's unique position in the market, particularly with its EUV technology, has significantly reduced competition, making it challenging for other companies to catch up.
- ASML has established intricate relationships with nearly 800 suppliers, ensuring its dominance in the market and making it difficult for competitors to emerge.
- ASML's strategic growth plans include a projected 20% sales growth in the current year and an annual revenue growth rate of 11% until the end of the decade.
- ASML's focus on reducing the cost per transistor over the years has been a key factor in its success and will continue to drive its growth in the future.
- ASML's involvement in the global chip supply chain has raised concerns about overreliance on a few key players, prompting initiatives like the U.S. Chips Act and similar acts in other countries.
- TSMC, a major player in chip manufacturing, is investing heavily to ramp up production, aiming to address the global chip shortage and maintain its position as a leading chipmaker.
- TSMC's expansion into the U.S. with a new fabrication plant in Arizona signifies a shift in advanced chip manufacturing back to the United States, aiming to reduce dependency on overseas production.
25:29
TSMC's Expansion Enhances Domestic Chip Manufacturing
- TSMC's success is attributed to the quality of its products, which have brought significant business opportunities.
- The secrecy surrounding TSMC's sites, previously closed to U.S. media, is linked to the crucial IP protection in the industry.
- Chang, the former chairman of TSMC, retired at 86, leaving behind a successful pure-play foundry concept.
- TSMC is striving to produce the world's first three-nanometer chips, competing with Samsung and Intel.
- Chips are made by printing minuscule circuitry on silicon wafers, with smaller transistors allowing for more processing power in less space.
- The chip shortage has impacted various industries, leading to production delays for companies like Apple and GM.
- TSMC is constructing a five-nanometer fab in Arizona to cater to its U.S. customer base, with plans to recycle water and reduce environmental impact.
- TSMC is relocating top engineers from Taiwan to the U.S. to bolster its workforce and tap into a larger pool of analog designers.
- The U.S. government and industry are incentivizing chip manufacturing on U.S. soil to reduce reliance on foreign production.
- TSMC's expansion in the U.S. aims to enhance domestic chip manufacturing capabilities and alleviate global chip shortages.
38:23
Intel's Expansion and Innovation in Chip Manufacturing
- Intel's new CEO has a plan to address the global chip shortage by expanding operations in Oregon, New Mexico, Arizona, Ireland, and Israel.
- The company is investing $20 billion in new fabs in Arizona to produce chips for Amazon, Qualcomm, and others, aiming for self-sufficiency in the U.S.
- Intel's history includes pivotal moments like transitioning from memory chips to microprocessors in 1985, a move that reshaped the industry.
- The company's founder, William Shockley, played a significant role in the development of transistors, essential for computing.
- Intel's growth saw it go public in 1971, with innovations like the world's first CPU, the 4004, and the x86 architecture processors.
- Intel's current CEO, Pat Gelsinger, is focusing on manufacturing, aiming to surpass competitors like TSMC and Samsung by 2025.
- Intel's expansion includes building new fabs in Oregon and Arizona, with a focus on clean rooms and advanced equipment to produce chips.
- The company is investing in water treatment facilities to manage the significant water usage in chip manufacturing.
- Intel collaborates with TSMC for some chip production, highlighting the complexity of the chip supply chain and different chip sizes for various applications.
- Intel's journey includes challenges like delays in adopting EUV machines for chip production, impacting its competitiveness in the market.
51:27
Intel's Chip Production Challenges and Innovations
- Intel faced delays in chip production, with their seven nanometer chip, now called Intel 4 or Meteor Lake, being pushed back about a year, aligning with TSMC and Samsung's three nanometer nodes production timeline.
- The chip shortage has impacted various industries, with Apple reducing iPhone 13 production targets, and carmakers like GM and Toyota pausing production due to component shortages.
- Intel is establishing a new business called Intel Foundry Services, aiming to manufacture wafers for customers like Amazon, Qualcomm, and the U.S. government, potentially reshaping the chip manufacturing landscape in the U.S.
- Intel is developing an 18A chip for 2025, using angstrom as a measurement unit, aiming to surpass competitors and become the world's largest integrated design and manufacturer of silicon in the long term.
