Nvidia has ascended to become the world's most valuable company, a remarkable achievement driven by its cutting-edge chips that are fueling the global artificial intelligence revolution. However, this success story is intricately linked to a lesser-known but equally crucial player: ASML, the Dutch semiconductor equipment manufacturer.
The Indispensable Role of ASML in Chip Manufacturing
ASML, Europe's largest technology company, specializes in producing lithography machines that print extremely fine patterns onto silicon wafers. This technology is fundamental to creating the advanced semiconductors that power Nvidia's AI processors. The company holds a unique position as the sole producer of extreme ultraviolet (EUV) lithography machines, which are essential for manufacturing the most sophisticated chips available today.
With approximately 90% of the broader lithography market under its control, ASML has established a near-monopoly that makes it an indispensable partner in the global semiconductor supply chain. This dominance enables tech giants like Nvidia to produce the high-performance AI chips that are transforming industries worldwide.
Why Competitors Struggle to Challenge ASML's Supremacy
In a recent analysis seen by CNBC, Bank of America analyst Didier Scemama highlighted ASML's likely continued dominance in next-generation EUV lithography technology. He noted that ASML has successfully industrialized this advanced technology, which he believes will support many disruptive trends throughout this decade.
This assessment followed ASML's impressive fourth-quarter 2025 earnings report, which revealed bookings more than double analyst expectations. Javier Correonero, an equity analyst at Morningstar, emphasized to CNBC that lithography represents "the building block of any chip," with ASML machines involved in producing 99% of all semiconductors.
Correonero explained that companies like Japan's Nikon and Canon, which supply some lithography tools for less advanced process nodes, remain "far-away competitors." He noted that these conglomerates have invested only a tiny fraction of what ASML has committed over three decades, making catching up virtually impossible at this stage.
ASML's Advanced EUV Machine Categories
ASML manufactures two primary categories of EUV machines:
- Low-numerical-aperture systems: These machines are currently used to manufacture existing AI chips, including Nvidia's Blackwell architecture processors.
- High-numerical-aperture systems: These advanced systems are employed in research and development by companies working on next-generation semiconductor technologies.
Both systems operate through a sophisticated process involving high-power lasers fired at molten tin droplets within a vacuum chamber. This generates plasma that emits EUV light, which is then directed through precise mirrors and reflected off a mask containing circuit patterns. These patterns are reduced in size and transferred onto silicon wafers to create chip layers.
Financial Performance and Market Impact
EUV systems represented a significant portion of ASML's booking value during the fourth quarter of 2025, contributing 7.4 billion euros ($8.8 billion) out of total net bookings of 13.2 billion euros ($15.7 billion). Throughout the full year, ASML sold 48 EUV systems, generating 11.6 billion euros ($13.8 billion) in revenue.
While ASML doesn't publicly disclose machine pricing, analysts estimate that high-NA EUV systems cost between 320 million euros ($382 million) and 400 million euros ($478 million), with low-NA systems priced around 220 million euros ($263 million).
Major semiconductor foundries like Taiwan-based TSMC purchase these machines to manufacture chips for designers including Nvidia. Companies such as TSMC, Intel, and Samsung are currently testing high-NA EUV systems in laboratory environments, with expectations that this technology will reach high-volume manufacturing by 2027-2028, with Intel likely being the first adopter.
Market Valuation and Future Outlook
ASML's share price demonstrated impressive growth, increasing 36% last year and gaining an additional 32% since January 1. Earlier this month, the company became only the third European firm to reach a market valuation of $500 billion, a milestone it has maintained.
Analysts anticipate further stock gains, citing sustained demand for advanced chips connected to AI-related investments. ASML projects net sales between 34 billion euros ($40.5 billion) and 39 billion euros ($46.6 billion) in 2026, compared to 32.7 billion euros ($39 billion) reported in 2025.
The symbiotic relationship between Nvidia's AI leadership and ASML's technological monopoly creates a powerful dynamic in the semiconductor industry, with both companies positioned to benefit from continued AI expansion and technological advancement.
