By now, everyone has heard about NVDIA. The world’s largest company by market capitalisation. Most people have heard about TSMC – the Taiwan Semiconductor Manufacturing Company. TSMC has a virtual monopoly on the manufacturing of the most advanced chips – those with a diameter of less than 7 nano-meters. Without TSMC, NVDIA, and for that matter Apple, would not be able to exist. The smaller the chip, the shorter the distance the electrons have to travel between transistors. For NVIDIA, this is important as smaller chips means that it can pack more computing power into its GPU’s used to train large language models. Each of its GPU’s will be able to crunch more data, faster, because it can squeeze more transistors into each unit.
For Apple, smaller chips are a key component of maintaining vertical integration. It allows their software and hardware to do things competitors can’t. Your iPhone 18 will run on a 2-nonometer chip, of course, manufactured by TSMC. Apple has been said to buy out 100% of TSMC’s capacity for the first 6-12 months after TSMC develops a new generation of chips, continuously keeping itself ahead of competitors.
How does TSMC Manufacture its Chips
Manufacturing a 2-nanometer chip has been called one of humanities most complex achievements. The process involves thousands of steps and can take 3-4 months from start to finish.
Image: TSMC
The process starts with sand. Common quartz sand is purified into nearly 100% pure silicon. The silicon is melted into a large heavy cylinder called an ingot. This ingot is then sliced and polished into the flattest surface on earth. The sliced wafer is spun at high speeds while a light sensitive liquid (photoresist) is dropped onto it. Centrifugal force spreads the liquid into an ultra thin and perfectly even layer across the wafer.
ASML
This is where the ASML machine steps in. ASML was founded in 1984 as a joint venture between Phillips and ASM international in Eindhoven, Netherlands. The ASML machine – the High NA Extreme Ultraviolet (EUV) scanner – is considered the single most complex piece of machinery ever created. Each machine costs close to $400m. The machine “manufactures” EUV light with a wavelength of 13.5nm. It has to manufacture light that doesn’t exist naturally on earth. This light then passes through a Numerical Aperture (NA) mirror system. The mirror system is used to focus the light. Normal mirrors are useless here as the EUV light passes straight through them.
The light hits the wafer coated with photoresist. The wafer is taken out of the ASML machine and dipped in a developer solution. This liquid washes away the parts of the photoresist that were hit by the light. In order for the “printing” to be accurate, the machine checks its position 20,000 per second.
Image: Courtesy of ASML
The ASML machine. It requires 3 Boeing 747’s to transport.
Who Makes the Money
Europe is often on the receiving end of American criticism for not creating tech giants. NVIDIA has 10 times the market capitalisation of ASML, yet without ASML, NVIDIA would not exist.
Comparison of the largest companies in Europe vs the largest US companies
For the 2025 financial year, ASML had revenues of EUR 32.67 billon, and profits (net income) of EUR 9.6 billion. NVIDIA had revenues of US$215 billion, and net income of US$120 billion. This gives NVDIA a net margin of 55.8%. Comparatively, ASML has a net margin of 29.38%. The meaning of this is that NVIDIA converts a (significantly) higher portion of its revenues into profit. The higher margins, along with the higher revenues, would explain the higher market capitalisation. The higher the profits that go to shareholders, the more valuable the company.
Are American companies just better at creating value for shareholders, even though the value to society might not be as high? Are more complicated products good for society, but not so good for shareholders. Consider META, it has a market capitalisation of $1.6 trillion. Mark Zuckerberg has created $1.6 trillion in value for shareholders, but how much value was created for society?
