Placid canals flanked by weeping willows and cycle paths, tulip fields and windmills… It is the classic image of an idyllic Dutch city called Veldhoven, just over 6 kilometers from Eindhoven. But along those bike lanes they pass among other engineers and scientists from ASML, a company that has in its hands nothing less than the future of Artificial Intelligence. And even if we get carried away by the launches of Google or the announcements of Nvidia or OpenAI, the real key is governed by the physics of ultraviolet light, the atomic purity of silicon crystals and a trade war that has ceased to be a bipolar duel and has become a a conflict of all against all worthy of the Cold War.
Before we start let’s look at Wall Street. Although Nvidia starred in a historic rally in 2023 and 2024 driven by the novelty of its designs, the cycle has started to rotate. As Jensen Huang’s company faces the law of large numbers and a slowdown in its explosive growth, the Dutch ASML, the protagonist of our story, has entered a notable acceleration phase in 2025 and 2026. This stock market change is not a coincidence but reflects the massive deployment of capital, estimated at more than $50 billion only by TSMC for this year, destined for the physical tools necessary to manufacture the next generation of artificial intelligence.
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That is to say, once the present has settled with regard to the economic boom of Artificial Intelligence, semiconductor manufacturers are already thinking about the future and to do so they have to prepare their factories in a hurry to face a demand that is exceeding all forecasts. But to start these factories there are key components that are not so easy to obtain. This is why investors have understood that chip design is vital, but the machine that prints it is irreplaceable.
And precisely the company that dominates this ecosystem without discussion is the aforementioned ASML Holding N.V., a company about which it is not unreasonable to say that Its strategic importance exceeds that of most sovereign nations in the world. Its monopoly on Extreme Ultraviolet (EUV) lithography is the result of such high technical complexity that it acts as an almost insurmountable barrier to entry. To understand the magnitude of its dominance, just look at the machine itself. A modern EUV scanner is described by industry experts not only as a manufacturing tool, but as the most complex device ever mass produced by humanityrivaling in precision and technical complexity, according to experts, only with the Large Hadron Collider.
The operation seems to be taken from the engine room of the Death Star. First a generator shoots microscopic droplets of molten tin at a speed of 70 meters per second. Then a high-powered laser hits each droplet twice: the first impact flattens it and the second vaporizes it into plasma, emitting 13.5-nanometer EUV light. This cycle repeats 50,000 times per second in an almost perfect vacuum. The optical system, supplied by the German Carl Zeiss, uses mirrors of such perfection that, if they were scaled to the size of Germany, the most relevant irregularity would not exceed one millimeter. This absolute precision is necessary to print modern circuits with no margin for error.
It is a unique process that requires an unprecedented technological commitment… and yet ASML’s sovereignty over its own technology is limited. Although the company is based in Veldhoven, Netherlands, the heart of its machine, the laser light source, comes from the acquisition of the American company Cymer in 2012. Containing critical technology originally developed in the USA, the Cymer lasers that are an irreplaceable part of ASML machines are subject to the jurisdiction of Washington’s Foreign Direct Product Rule (FDPR), although the intellectual property belongs to ASML as the owner of Cymer. This legal mechanism allows the United States to veto the export of these machines to Chinaturning technical innovation into a foreign policy tool that overrides the decisions of the European Union.
And here we stop talking about technology that borders on science fiction and talk about the sad geopolitical panorama that is currently presented to us. With the recent tensions caused by the United States and its traditional allies in Europe, it is possible that the diplomatic ups and downs over Greenland will end up affecting the world map of the development of the hardware necessary for Artificial Intelligence. The Trump administration threatening to impose tariffs of up to 25% on goods from several European countries and the reactions of the European Union are still developing.
In this context of tension, ASML’s strategic dominance over sub-7nm semiconductor manufacturing has emerged as a potential commercial weapon in the hands of the European Union. Analysts and experts such as Nobel Prize winner Paul Krugman or researchers such as Johnny Ryan have pointed out that Europe has, in theory, a perfect choke point: without ASML machines and their spare parts, the American AI industry, led by Nvidia and Intel, would come to a standstill in a matter of weeks.
Voices in Brussels, European media such as The Guardian and strategic think tanks They have called ASML a commercial bazooka with enormous potential to force favorable negotiations with Washington and therefore it appears that the EU is positioning itself with increasing confidence to exert this strategic pressure. The Anti-Coercion Instrument (ACI), approved in 2023 and already used against China, gives the EU Powerful legal tools to respond to unfair business practicesincluding selective restrictions on critical exports such as ASML’s EUV machines.?
To add more pressure to the ecosystem, the United States has implemented a 25% tariff on the import of advanced AI chips, such as Nvidia’s H200 models, from China. This measure, designed under the premise of national security, acts in practice as an indirect export taxseeking to capture value from desperate global demand and force the location of data centers on US soil, since purchases for domestic use are exempt. This has created logistical chaos, with reports that China has even blocked the entry of these taxed chipspreferring scarcity or local alternatives rather than financing the US treasury.
Faced with this technological siege, China has opted for a resistance strategy based on brute force and radical innovation. No access to ASML’s EUV machines, andThe Chinese manufacturer SMIC and the giant Huawei have managed to produce 7 and 5 nanometer chips using older machines using a technique known as multi-patterning. This process involves exposing the silicon wafer three or four times for each layer of the circuit, which exponentially multiplies the risk of alignment errors. As a result, production yields are lowestimated between 30% and 50%, compared to the industry standard of 90%. For Beijing, this exorbitant cost is not a financial loss, but the inevitable Price of its national security.
Beyond immediate survival, China is executing its own “Manhattan Project” to break the light monopoly exercised by ASML and controlled by the United States. In high-security laboratories in Shenzhen, engineers are working on a prototype EUV scanner that uses a different light source technology called LDP, mechanically simpler but less powerful. In parallel, Tsinghua University is exploring the SSMB project, a revolutionary bet that proposes using giant particle accelerators as centralized light factories to supply multiple scanners. Although intelligence reports describe current prototypes as Frankenstein machines assembled from second-hand optics, political will and invested capital suggest that underestimating China’s long-term capabilities would be a strategic mistake.
But the fronts do not end here: while the West controls the complex machinery, China has responded by instrumentalizing its dominance over the periodic table. Beijing controls the global supply of gallium and germanium, essential for the energy efficiency of data centers and optical interconnections, as well as antimony, vital for the military industry. Despite temporary trade truces, China maintains an export licensing system that acts as a strategic tap– You can open it to ease tensions or close it to strangle specific sectors of Western technology. It is a constant reminder that, in the AI war, the West’s vulnerability lies at the very foundation of the material supply chain.
In conclusion, the AI hardware industry has ceased to be an integrated global market and has become a tariff battlefield. ASML’s stock market acceleration in the face of Nvidia’s maturation confirms that value is shifting towards physical manufacturing capacity. However, in this new order, Europe risks being caught between the commercial aggressiveness of its American ally and the materials control of its Chinese rival. Artificial intelligence is no longer a matter of immaterial algorithms, but of atoms, tariffs, lasers and the raw ability of nations to physically etch their sovereignty in silicon.
