Semiconductor lithography has been around for a while, in fact, the creation of semiconductors first started in the US. Advanced Semiconductor Materials Lithography (ASML) began its journey in the US in 1988, with five location in the US and one Dutch office that’s now known to be its headquarters. ASML is one of the most revolutionary breakthroughs in science and technology to this day. The company is known for creating the machines that manufacture the actual chips that you use in your everyday life, whether it be on your phone, computer, car and even your refrigerator. In this day and age, we rely heavily on this one company to supply the machines that create the fastest chips because they’re the only suppliers of extreme ultraviolet (EUV) machines. Currently there are two other competitors that create Deep Ultraviolet (DUV) machines known as Nikon and the other Canon, Nikon is a close competitor of manufacturing DUV’s but like said previously, ASML is the only company to produce EUV machines. The difference between DUV and EUV is that DUV has a wavelength of 248 and 193 nanometers when creating chips as opposed to EUV’s 100 to 10 nm, 10,000x smaller than a human hair. EUV is able to basically make chips that are smaller in size and faster, a huge jump from the ever so complicated DUV machines. Not only are these machines efficient in creating chips but durable too, CEO Peter Wennink claims that 96% of all machines they’ve ever sold are still working to this day.
ASML went public on the New York stock exchange in 1995 and was seen by big tech companies as the future of science and technology. In 2012, ASML wasn’t able to create EUV machines that it had its eyes on because of monetary deficiencies so the company was able to give away a quarter of its shares to the big 3 chip manufacturers, Intel, Samsung and Taiwan Semiconductor Manufacturing Company (TSMC). Now, with the creation of EUV, there are supply issues because only one company is creating these machines. Chip creators like TSMC and Intel have Semiconductor fabrication (fabs), these are the factories that use ASML’s machines to create the semiconductor chips. The problem with this whole system is that there is a huge monopoly that makes it so no new businesses are able to join in on the profit by virtue of the machines themselves, costing up to 300 million dollars and the factories, that can take billions of dollars to not just build but manage. TSMC is the biggest player right now with over 40% of ASML’s supply in EUV machines, big companies like Intel and Samsung are even falling behind to ASML’s reining monopoly.
Apple gets all their chips from TSMC, making up 25% of TSMC’s revenue which is a staggering number. If this didn’t make things worse, TSMC is branching out into the US to build fabs in Arizona where the production will start in 2024. This is possible because of the bipartisan CHIPS and Science Act of 2022 that President Biden announced, providing 52 billion dollars in subsidies to the semiconductor industry. While all the pressure of competing with demand from fabs is stuck with ASML, a conglomerate company named SEMI predicts there will be about 72 new fab machines built around the world by 2024; this creates further pressure for ASML and chip manufactures. So what are the implications for everyday people? Having fabs can be a good thing for a country because it increases revenue and trade, but the catch is that every fab needs about 4.7 million gallons of water a day to support its operation. Water is a necessity because it cools down equipment and cleans silicon wafers that makes production of chips possible. The amount of water for one fab is equivalent to nearly what 25,000 residents in Arizona will use in a day.
Taiwan itself is already seeing the worst droughts its had in 50 years, they now rely on getting water to keep their fabs running by going to the south-side of the island with trucks. If droughts like these were to hit other countries because of the current chip war, it can have negative effects on agriculture. Prices of food will most likely skyrocket because there isn’t enough water to grow specific amount of crops due to allocating most of the water supply to chip production. Furthermore, the growing demand of fabs can lead ASML to capitulate from the inside and slow down their research on building new machines because they’re stuck supplying so many other machines to countries around the world. There are both positives and negatives to the semiconductor industry and while it’s seen mostly in a positive light, there are growing concerns on what this CHIPS act has entailed for the future of not just the US, but the world.
Sources
https://www.theverge.com/22628925/water-semiconductor-shortage-arizona-drought
https://static.seekingalpha.com/uploads/sa_presentations/919/84919/original.pdf
https://www.washingtonpost.com/us-policy/2022/06/28/tsmc-arizona-construction-subsidies/
