[Hardware] Does ASML have a monopoly on the production of wafer machines?

[WilkerCSBD]

When we talk about the semiconductor industry, companies such as TSMC, Intel, Samsung or GlobalFoundries always come to mind, but the reality is that these giants could do little without the help of ASML, and more specifically of lithographic machines than these. they manufacture. Currently, only Nikon and Canon overshadow them, but their market share and the 'range' of their machines cannot really compete with the giant we like or not, they have a virtual monopoly on it.

We live in an era in which semiconductor technology has become the greatest focus of technological competition in the world's leading producing countries. In this sense, the central equipment of the production line is the lithography machine, since it is this that allows us to manufacture the wafers with the chips that later make up our processors, and in this area only the Dutch company ASML is able to follow the uptrend of the market, but to what extent?

The monopoly power of ASML
Most people, including hardware enthusiasts, have no idea of the power ASML has in the lithography market. In the latest report, published by Bank of China Securities, some data has been provided that will help us get an idea of how far the power of this company based in Holland reaches.

ASML-7

Let's take a look at the market in 2020: According to announcements from ASML, Canon and Nikon, global lithography machine sales total 413 units among the three companies, with a 15% year-on-year increase in shipments, which means it is a growing industry and that the manufacturers of chips every time require a greater number of machines to produce them (this is also good news because it indicates that they are either renovating their machines or increasing their production capacity, be it said).

Of these 413 units sold in 2020, 258 came from ASML, representing 62.5% of the total market share. Canon's sales were 122 units, about 30%, while Nikon sold only 33 units, representing 8% of the total. However, if we make this same calculation counting the monetary income, ASML would monopolize 91% of the quota, while Canon would keep 6% and Nikon 3% nothing more; In other words, between the two Japanese companies they do not even reach a 10% market share, while ASML accounts for more than 90% of revenues.

There is no real competition in lithographic machines
It is clear that between the two companies that compete with ASML in this market, in reality they do not compete for sales or income, but the situation is even more shocking because Canon and Nikon lithographic machines are of Very low-end compared to ASML's EUV machines, considered the high-end and the only ones that follow the current market trend, which increasingly requires smaller and more advanced chips.

EUV cover

This means that, in addition to what we have already explained in terms of market share at the sales level and at the income level where ASML dominates and by far, in reality the Dutch company does not have any other company that manufactures at the same level as them, in other words, they literally have no competition in this regard in their product range. This also means that they have a total monopoly in the industry and that many companies depend on them; Obviously, the antitrust law cannot come into force here because in reality it is that there are no companies that manufacture the same products as them, it is literally impossible that they do not have a monopoly because there is no competition.

The bad news about this is that if ASML decided it needs more revenue (things are going pretty well for them in this regard for now because they brought in $ 4.5 billion in revenue last year) it could raise the price of its machines, which it would end up impacting the chip market. Probably there, the European Union would come into play to prevent abuses, but the reality is that the entire semiconductor market is practically in the hands of this company.