20 years of restarting life

Chapter 3669 ASML's Resilience

In the Battle of Verdun in 1916, the tide of the battle turned when a rookie artilleryman misfired a shell that hit a German arsenal.

However, when this green recruit fired that off-target shot, no one knew that this shell would rewrite the battle, the war, and even the world's power structure a few seconds later.

Just like ASML at this point in time, ASML's future in the lithography machine field only represented a hopeful but uncertain future.

You can place bets, but you shouldn't make excessively large or unpredictable bets.

The market still favors Nikon and Canon, these two titans of the East.

Nikon and Canon's lithography machines have a strong base of purchasing power in downstream related industries.

This core group consists of numerous thriving island companies in Japan: Hitachi, Mitsubishi, Fujitsu, Toyo Denki, Toshiba, Sharp, Sony, Sanyo, Toyota, Honda, Nissan, Suzuki, Panasonic, Kyocera, JVC, and more.

Moreover, both Nikon and Canon have strong electronics and electrical appliance industrial clusters.

It is precisely because of this huge procurement market that Nikon and Canon dare to invest billions of dollars to gamble on the next generation of 157nm light source dry lithography machines.

While ASML also has EUV-LLC alliance members such as AMD, Intel, Motorola, Philips, and TSMC, these European and American companies and Chinese companies do not, like Japanese companies, habitually link their corporate behavior with national development without thinking.

If it turns out that Nikon and Canon's 157nm light source dry lithography machines offer better overall procurement and usage performance and cost-effectiveness than ASML's products, they will vote with their feet without hesitation and purchase Nikon and Canon's lithography machines.

In other words, from the very beginning, ASML was far inferior to Nikon and Canon in terms of both corporate capabilities and product customers.

This is why when the EUV-LLC alliance was formed, a large number of European and American companies were making a lot of noise, but when it came to actually needing to contribute real money, they all pretended to be stupid and have not contributed a single penny so far.

It took them a month or two to finally squeeze out two hundred million US dollars, like squeezing toothpaste, to test the waters.

Then began another long argument. Even if they managed to squeeze out just a tiny bit of toothpaste, these shrewd companies wanted to squeeze out their own kind but not theirs, fully demonstrating the shamelessness of Western capitalist systems and their inability to concentrate resources on major tasks.

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On September 22, 1985, the United States, the United Kingdom, France, Germany, and Japan signed the Plaza Accord. The governments of the five countries jointly intervened in the foreign exchange market to induce the orderly depreciation of the US dollar against major currencies in order to solve the problem of the United States' huge trade deficit.

One of the most important demands is for a significant appreciation of the Japanese yen and the German mark to correct the overvalued dollar.

Over the next decade, the yen appreciated by more than 5% against the dollar on average each year, leading to a sustained boom in the domestic stock and real estate markets and a large influx of foreign capital into the Japanese market.

从85年到90年东洋的股价每年以30%、地价每年以15%的幅度增长，而同期的东洋名义GDP的年增幅只有5%。

What's even more amazing is that Japan still maintains a strong trade surplus with the United States.

The reason is that the products Japan exports to the US are mainly electronics, automobiles, and machinery, which local American companies still cannot replace. This completely thwarted the US's goal of reducing exports through yen appreciation. As a result, the entire Japanese government became complacent and made slogans such as "Japan is a hundred years ahead of the US," "Tokyo real estate can buy the entire US," and "Japan's system is a generation superior to the West."

Sony founder Akio Morita even wrote a book called "The East Can Say No," in which he argued that Japan should no longer be subservient to the United States, but should instead use its strong economic and technological power to firmly say no to the US. He claimed that Japan's semiconductor technology determines the military power of the United States, and that the US cannot do without Japan, not the other way around.

Against this backdrop, in 1987, the United States led the formation of the Sematech alliance in an attempt to regain the initiative after Japan's semiconductor industry had taken over, while also changing the passive trade deficit and potential restrictions on high-tech military industries.

However, despite their loud slogans, each of them has their own agenda. In the global lithography machine field, the two Japanese giants have always firmly dominated the top two positions in the market.

After the bursting of the Japanese economic bubble, the situation was dire. In 97, the US seized the opportunity and brought together a group of North American companies, including Intel, Motorola, and AMD, to form the EUV-LLC alliance.

The formation of the EUV-LLC alliance by these old foxes represents a significant shift from their previous Semattech alliance. The former aimed for self-reliance, while the latter, seeing no hope of self-reliance, sought to seize power through cunning and force.

The targets of this cunning and forceful scheme were Nikon and Canon. The aim was to trick them into separating their lithography machine industry and having North American companies invest in it, gradually turning the lithography machine divisions of these two companies into assets controlled by the United States.

Nikon and Canon have vivid memories of the Plaza Accord and are still wary of it; only a madman would try to negotiate with a tiger.

Meanwhile, knowing that the crown jewel of their high-tech industry chain had been targeted by shameless Westerners, the entire East was in an uproar, demanding that Nikon and Canon, just like the title of Akio Morita's book, loudly say no to the EUV-LLC alliance.

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Against this backdrop, the EUV-LLC alliance had no choice but to set its sights on ASML, the third-largest player in the industry.

Although Silicon Valley Group ranks fourth in the world in lithography machine capabilities, the EUV-LLC alliance is cunning in that if it involves Silicon Valley Group, it's as if the US is developing its own technology behind closed doors. Even if it can produce a next-generation lithography machine that is no worse than Nikon and Canon's, convincing European companies to purchase it is a headache.

Bringing ASML in is equivalent to bringing in Philips, TSMC, and other European and Asian companies. In the event of research and development failure, the losses can be shared.

Given the mindset of the EUV-LLC alliance, ASML's entry into the field of extreme ultraviolet (EUV) lithography inherently carried a tone of helplessness and failure.

Therefore, it is only natural that the expectations of all parties involved are low.

However, these people have overlooked a very important element: the excellence of ASML itself.

ASML originated from Philips' physics laboratory (Natlab). In 1962, after visiting Bell Labs in the United States and seeing the semiconductor chips displayed by Bell Labs, ASML was amazed and plunged into this field, burning through Philips' money for 22 years without any output.

For Philips, these 22 years have been a period of significant losses due to the waste of electricity. However, the same is true for the researchers at Natlab. Even though they have launched several iterative models of stepper lithography machines, they are simply not competitive with Fairchild's products in North America and have been shelved by Philips.

Because the research results cannot be commercialized, Natlab researchers have been receiving meager salaries. However, if they choose to switch jobs, they can at least get a much higher salary.

By 84, Philips had finally had enough of being exploited and decided to get rid of this burden.