In a small town in the Netherlands, there is only one factory that produces the only chip manufacturing machine that produces the type of light found naturally on the planet.
Known as EUV, this light is the only way to create cutting-edge semiconductor chips, one of the most valuable and important technologies in the world at scale. The factory is prohibited from selling EUV machines to China.
Below we will explain how the chips are made, why they became the focus of the US-China trade war, how Taiwan was drawn into the vortex, and what comes next. The answer is that we need three planes to travel from deep underground from space, from the dirtyest places in the world to the cleanest places, from the hottest temperatures, from artificial structures smaller than viruses, to the very big, and ultimately two opposite states at the same time.
How are they made?
The chip is made up of a thin, flat layer of silicon (called a wafer) that holds the electrical circuit. These circuits consist of billions of switches called transistors. Very complex and powerful chips containing these networks of transistors are commonly referred to as semiconductors.
If you want to build a semiconductor, you’ll need $380 million. This is the cost of modern EUV machines from Advanced Semiconductor Material Lithography (ASML). Delivery is a nightmare. The machine is so large and delicate that it requires 40 cargo containers, three cargo aircraft and 20 trucks to transport from the Dutch factory in Beldoven. All of this creates light at almost the same short wavelength as an x-ray, focusing, and having enough energy to penetrate the solid object.
Chipmakers strive to meet Moore’s law: its capabilities – or the predictions called number of transistors on the chip. If the chips keep the same size and ideally smaller, this means that the transistors must be finer.
The ASML machine carries the pattern into a silicon wafer that holds the transistors. The finer the pattern, the more you can stuff it into the chip. Company spokesman Marc Assinck compares the thickness of the pen stroke to the light wavelength. The thinner the pen should be, the more detailed the page is needed. EUV lights have very narrow wavelengths, invisible to the human eye, and pass through most materials.
The light is produced by firing a laser with a tin microscope ball. The tin evaporates into the plasma, and the plasma emits light, travels through the lithography machine and hits a specially made mirror. The light shines through the “mask,” a pattern of one layer of chips. Areas exposed to light cure, and areas that are not exposed will dissolve in the chemical solution, leaving a 3D pattern.
Think of a chip like a 100-story building. Each building takes four months to produce, and each floor has its own layout. This layout features only 25 nanometers. It is about 100 nanometers smaller than influenza virus particles. EUV and other lithography machines carve patterns of these layers one by one.
Building a machine is not easy. Like the chips themselves, they are assembled into dust-free rooms, the cleanest space on the planet. The chips work at the atom level: a single spot of dust can make them useless.
Why is Taiwan so important?
ASML creates a machine that makes the chips, but does not create the chips themselves. This is primarily done by another notable company with another notable name, TSMC, or Taiwanese semiconductor manufacturing company. Taiwan manufactures and supplies many of the US semiconductor chips, which adds to protecting Taiwan amid concerns that China will invade.
In 2022, the US persuaded the Dutch government to take control of ASML machines exports and limit sales to China. To date, according to ASML, no EUV lithography machines have been shipped to China. This means that unless you invent your own EUV lithography machine, or you will use deep ultraviolet lithography rather than extreme ultraviolet lithography, rather than in Western countries, if not more powerful than technology a few years old. These machines can produce extremely complex chips on a large scale, but they are not that complicated.
Another technology that the US and China are fiercely competing to advance, artificial intelligence relies on the world’s most complex and powerful semiconductor chips. The main designers of these chips are an American company called Nvidia. The chip is generated by TSMC on a machine created by ASML.
China’s lack of access to EUV lithography explains why the debut of Chinese chatbot Deepseek shocked the market. Chinese companies have produced products as powerful as Chat GPT, which has advanced, cheaper technology. Deepseek claims it costs just $6 million to train compared to the billions spent by US companies to do the same.
“The US believes that AI is a transformative technology and affects almost every sector of the economy,” says Chris Miller, author of Chip War: The Fight for The World the Critical Technology. “So we don’t want China to gain advantage.”
It is also important for defense and intelligence. The People’s Liberation Army has made “great advances” in recent years in efforts to use AI in combat, according to the Security and Emerging Technology Centre.
However, not everyone believes that access to Chinese ASML machines, including ASML, should be restricted.
At a Bloomberg meeting in October, CEO Christophe Foucet said, “We were asked how much the security threat restrictions are.
The debate may not need to last long. In 2024, China’s Shanghai Microelectronics Company (SMIC) revealed that it had filed a patent for its EUV lithography machine a year ago.
Where do you find rare earths?
China boasts other advantages over the West in the race to produce chips. In addition to silicon, semiconductors require so-called “rare earths,” especially germanium and gallium. By 2030, gallium demand is projected to increase by more than 350% from the 2015 level. Demand for germanium is expected to double over the same period. China produces 98% of the world’s raw gallium and more than two-thirds of the world’s raw germanium.
This is one of the reasons why Donald Trump is putting pressure on Ukraine to hand over its rare earth in exchange for aid, and has announced that he has agreed to launch a “recovery and processing initiative” for the rare earth after his first meeting with Indian Prime Minister Narendra Modi.
Does Quantum Chips change everything?
Next is the quantum chip. In theory, quantum chips allow computers to solve problems much faster than the world’s current supercomputers. This is because instead of an on or off equivalent, or zero or zero or one, the Quantum chip can be in both states. The general explanation is a maze. A regular computer will find a path through the maze by testing each option one after the other. Quantum computers can test them all at once.
So far, quantum computing has been achieved only in limited circumstances. However, Microsoft announced this month that it had built a chip that means quantum computers could be built within years, not decades.
Meanwhile, the Chinese Institute of Research, a European think tank, says China’s public spending on quantum technology is four times higher than the US. Furthermore, the chips are not made from EUV machines. Instead, quantum chips are made by machines that use electrons to engrave patterns onto chips. China has these machines.
China also has resources that are often overlooked in chip discussions, said David Reilly, professor of physics and head of the Quantum program at the University of Sydney.
“The key to all this is people,” he says. As people see their needs and know what the existing way to meet those needs is, breakthroughs can happen and imagine what they are.
“There are a lot of smart people in China. They train a lot of STEM graduates,” he says. And those alumni tend to pursue undergraduate or graduate degrees from universities in the US, Australia and Europe before returning.
“The government doesn’t want to say it’s blind to it, but it has a lot of focus on relocating concrete,” he says. “Invention doesn’t happen in a vacuum.”
