ASML is the Most Valuable Company in Europe: Fundamental for the Entire Chip Industry

ASML has just rewritten the parameters of corporate valuation in Europe. The Dutch company closed on Wednesday, June 3, with a market capitalization of $668 billion, surpassing the previous record of $650 billion set by Novo Nordisk in June 2024 and solidifying its position as the highest valued company in the history of the continent.

The growth was triggered by nearly identical notes from JPMorgan and Morgan Stanley, which raised their price targets to €1,900 from €1,515 and to €1,660 from €1,400, respectively. Both banks maintained an 'Overweight' rating, betting on ASML's production capacity well above market estimates. ASML's capabilities were crucial in achieving the new rating: the company can deliver over 110 low-NA EUV systems without the need for new facilities, significantly higher than the approximately 90 maximum units estimated by investors and also exceeding the short-term production stated by the company itself.

The Scrutiny of ASML's Monopoly: Threats and Future Prospects

ASML's role is critical for the entire semiconductor industry. The company is the sole supplier of extreme ultraviolet (EUV) lithography machines used by giants like TSMC, Samsung, and Intel for the production of cutting-edge logic chips. Every next-generation silicon wafer, essential for training and running artificial intelligence models, passes through an ASML scanner. Consequently, increased machine shipments directly translate to greater capacity for downstream foundries, a key factor in mitigating the bottleneck that EUV still represents in the supply of advanced chips.

Despite its rise, ASML's market cap remains distant from the trillion-dollar mark reached by several US chip companies, and its 50% gain this year has followed the semiconductor sector's performance, which benefited more from AI demand. Morgan Stanley emphasized that 'confidence in short-term shipments' was bolstered by comments made during ASML's annual general meeting in April, where the company outlined an expansion plan for the Brainport Industries Campus in Eindhoven, with work expected to start in the third quarter of 2026.

ASML's dominance, while a de facto monopoly, is not immune to challenges. Various initiatives aim to contest its position. Among them, Substrate, a San Francisco startup funded by Peter Thiel's Founders Fund and In-Q-Tel, has raised $100 million to develop a particle accelerator-based X-ray lithography system. This system promises to produce 2nm-class features at around $10,000 per wafer, compared to the estimated $100,000 for the more advanced EUV.

Canon is also marketing nanoimprint tools, while China has announced an alternative solution to ASML's equipment. However, none of these alternatives are set to replace an EUV scanner in high-volume logic production in the short term, where ASML tools range from about $235 million for a low-NA system to around $380 million for the High-NA EXE:5200B, installed by Intel for its 14A node.