“Data may be the new oil, but without processing power, it’s just crude. The real gold is the ability to refine it.
A friend once told me that modern technology feels like magic. “I press a button, and the world responds,” he said.
But the real magic isn’t the app on your phone—it’s the microscopic dance of electrons inside chips that are 10,000× thinner than a human hair.
And at the heart of creating those chips is a quiet Dutch company called ASML, located in the small town of Veldhoven.
If the internet is the nervous system of the modern world, chips are its neurons—and ASML makes the machines that print those neurons.
Most people think the biggest constraint to AI is data. But the real bottleneck is processing power—the ability to compute fast enough.
Energy is also fast becoming the real bottleneck for AI.
A large single data centre can consume the same electricity as two million homes, and Microsoft’s CEO Satya Nadella recently noted that the main challenge isn’t chip supply anymore; it’s finding enough power to run them as well.
A modern car has 1,000–3,000 chips. Every new AI breakthrough needs even more computing power. And the world’s ability to increase that power depends largely on ASML.
So when people talk about “AI revolutions”, we’re actually talking about ASML enabling those revolutions quietly in the background—like a stagehand running the spotlight while applause goes elsewhere.
ASML sells the machines that etch patterns onto silicon wafers to make advanced chips.
- 70% comes from selling lithography systems (EUV and DUV)
EUV stands for Extreme Ultraviolet uses 13.5 nm light to print the smallest, most advanced chip features. Requires mirrors and a vacuum. Used for leading-edge chips (5 nm and below).
DUV stands for Deep Ultraviolet uses longer wavelengths and standard lenses. Cheaper and faster for many chip layers, but less precise than EUV. Still widely used today.
- Each EUV machine costs $200–$400M
- Takes 18 months to build
- So complex that it requires 7 Boeing 747s + 30 trucks just to ship one
- 30%+ comes from servicing and upgrading those machines. (They’re like cars: once you buy one, you need an entire lifetime of tune-ups.)
This is the holy grail: “Sell the product + sell the maintenance forever.” This enables recurring income and stable revenue.
Warren Buffett once said, “If I can’t buy a monopoly, I’ll buy a duopoly. If I can’t buy a duopoly, I’ll find an oligopoly.”
ASML’s dominance looks unshakeable right now, but capitalism is relentless.
Somewhere, startups are working hard to challenge it — difficult in the near term, yet innovation always finds a way.
As Darwin said, it’s not the strongest that survive, but the most adaptable — and I hope ASML clearly gets that.
Why ASML Won (and Why Japan Lost)
In the 1980s, Japan ruled chip-making. Nikon and Canon owned 75% of the lithography market. Giants.
But then they fell into a classic trap: they tried to perfect the past, and they had a risk-averse culture instead of inventing the future.
ASML did the opposite. It bet the company on a new technology—EUV, using extreme ultraviolet light to print circuits at 13.5 nanometers (10,000× thinner than a human hair).
It took 17 years and a €6 billion investment before EUV finally worked. For years, they weren’t sure it ever would.
This is one of those rare business lessons worth pausing on.
As Zig Ziglar once said, “You don’t have to be great to start, but you have to start to be great.”
The world now runs on the chip patterns that only ASML’s EUV machines can produce.
Geopolitics, Power, and the Quiet Middle
Forget oil pipelines. The world’s semiconductor manufacturing future runs through:
- TSMC in Taiwan
- Samsung in Korea
- ASML in the Netherlands
Chip-making sits in the middle of a U.S.–China power struggle. China spends more on chips than on oil.
America now views chips as national security infrastructure.
The semiconductor supply chain is so delicate that the future of AI depends on it.
This is fragile sophistication and bold innovation.
ASML didn’t win by moving fast. It won by choosing a path so hard that nobody else was willing to follow.
In a world obsessed with speed, maybe the lesson is this:
Real breakthroughs don’t happen when you rush. They happen when you hold your nerve long enough for the future to catch up.
It’s like compounding interest — steady, incremental progress that builds quietly until it creates something remarkable over time.
We invested in ASML early, when uncertainty was high and the valuation was far lower, because we believe semiconductors are the backbone of modern technology.
Awet Ghirmay, Head of Investment Research
If you want to learn more about this topic, please find the link here.
More information about our fund can be found here: Hargreaves Lansdown or AJ Bell.
Risk warnings
The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
