Hi Jeroen, thanks for your comment! I’m glad to hear you hold shares in both ASML and TSMC, two powerhouses in the semiconductor space. I didn’t dive deeply into TSMC in this article because my focus was on ASML’s unique role in the ecosystem, but I’m happy to share my thoughts.
I’ve been cautious about TSMC due to the geopolitical risks tied to its location in Taiwan. With China’s increasing assertiveness and stated goal of reunification, potentially by force, Taiwan feels like a significant red flag for me. A conflict or even heightened tensions could disrupt TSMC’s operations, which would have massive ripple effects across the global chip supply chain.
As an investor, my number one rule is “don’t lose,” so I tend to shy away from risks that could lead to catastrophic losses, even if the upside is tempting. That said, TSMC’s dominance and growth potential are hard to ignore, and they’ve been resilient so far.
Hi Arnold, thanks for the reply. For me TSMC is a risk diversification next to myvposition in ASML. Both are working close together but are not always on the same speed. If one does well the other one should also tend to benefit. I feel different about the tense relations between China and Taiwan as being only a risk for TSMC. But lets hope that this situation never escalates.
Good (long) read…however, I do miss your thoughts about Huawei. You say China can’t be as fast as 2030, but recent history tells us that when they are cornered (like the US did and does), they get really quick really fast. They even stole / hired things and people for ASML if I got informed correctly.
You don’t consider Huawei as a risk for ASML’s dominance?
I do own ASML. Quite a lot - but got in on a waaaay higher price unfortunately…so I do hope they recover and soon :)
Hi Wouter, dont think there is a short answer here, but let me try to answer your great but complex question.
You’re right that China has historically moved quickly to close technological gaps (sometimes through controversial means like IP theft or talent poaching). However, I remain less concerned about Huawei posing an immediate threat to ASML’s dominance.
As mentioned in my article, ASML’s moats are incredibly robust. The complexity of their EUV lithography systems is unparalleled. EUV machines involve tens of thousands of components, requiring precision at the atomic level, and ASML has spent decades perfecting this technology. This isn’t something that can be easily reverse-engineered or replicated, even with significant resources.
Additionally, ASML’s ecosystem is a major barrier: they collaborate closely with a network of suppliers (like Zeiss for optics) and customers (like TSMC, Intel, and Samsung), creating a tightly integrated supply chain that’s difficult for a newcomer like Huawei to penetrate or replicate.
You mentioned China’s history of catching up quickly when cornered, as the U.S. did in the past. That’s a fair point. China has made impressive strides, especially through companies like SMIC and Huawei. Huawei has been developing its own chip designs and working around US sanctions by building domestic supply chains. However, lithography remains their Achilles’ heel. SMIC, China’s leading foundry, is still several generations behind TSMC in process nodes (e.g., SMIC is at 7nm while TSMC is at 3nm and below as of 2025). Without access to EUV, which ASML exclusively provides, China’s ability to compete at the cutting edge is limited. Even if they poach talent or acquire technology, building an EUV system from scratch would take years, if not decades, due to the sheer complexity and ASML’s patent protections.
I wouldn’t completely dismiss Huawei as a long-term risk. They’ve shown resilience, and China’s government is heavily incentivizing self-sufficiency in semiconductors. If they eventually develop a competing technology or find ways to bypass ASML’s moats (e.g., through alternative lithography methods like multi-patterning with DUV), it could pressure ASML’s market position. But for now, I believe ASML’s lead is secure, especially given their near-monopoly on EUV and the trust they’ve built with global chipmakers.
I agree with you that it won’t be easily done (close the gap). But even this market might be disrupted, and I do hope it won’t happen anytime soon, looking at my position in ASML. I need strong years to recover and hopefully get ahead too. ASML is on pole-position, let’s hope they execute the race as spot-on as we expect them to do 😬
I hold shares of ASML and TSMC. Curious about your thoughts on TSMC.
Hi Jeroen, thanks for your comment! I’m glad to hear you hold shares in both ASML and TSMC, two powerhouses in the semiconductor space. I didn’t dive deeply into TSMC in this article because my focus was on ASML’s unique role in the ecosystem, but I’m happy to share my thoughts.
I’ve been cautious about TSMC due to the geopolitical risks tied to its location in Taiwan. With China’s increasing assertiveness and stated goal of reunification, potentially by force, Taiwan feels like a significant red flag for me. A conflict or even heightened tensions could disrupt TSMC’s operations, which would have massive ripple effects across the global chip supply chain.
As an investor, my number one rule is “don’t lose,” so I tend to shy away from risks that could lead to catastrophic losses, even if the upside is tempting. That said, TSMC’s dominance and growth potential are hard to ignore, and they’ve been resilient so far.
Hi Arnold, thanks for the reply. For me TSMC is a risk diversification next to myvposition in ASML. Both are working close together but are not always on the same speed. If one does well the other one should also tend to benefit. I feel different about the tense relations between China and Taiwan as being only a risk for TSMC. But lets hope that this situation never escalates.
Good (long) read…however, I do miss your thoughts about Huawei. You say China can’t be as fast as 2030, but recent history tells us that when they are cornered (like the US did and does), they get really quick really fast. They even stole / hired things and people for ASML if I got informed correctly.
You don’t consider Huawei as a risk for ASML’s dominance?
I do own ASML. Quite a lot - but got in on a waaaay higher price unfortunately…so I do hope they recover and soon :)
Hi Wouter, dont think there is a short answer here, but let me try to answer your great but complex question.
You’re right that China has historically moved quickly to close technological gaps (sometimes through controversial means like IP theft or talent poaching). However, I remain less concerned about Huawei posing an immediate threat to ASML’s dominance.
As mentioned in my article, ASML’s moats are incredibly robust. The complexity of their EUV lithography systems is unparalleled. EUV machines involve tens of thousands of components, requiring precision at the atomic level, and ASML has spent decades perfecting this technology. This isn’t something that can be easily reverse-engineered or replicated, even with significant resources.
Additionally, ASML’s ecosystem is a major barrier: they collaborate closely with a network of suppliers (like Zeiss for optics) and customers (like TSMC, Intel, and Samsung), creating a tightly integrated supply chain that’s difficult for a newcomer like Huawei to penetrate or replicate.
You mentioned China’s history of catching up quickly when cornered, as the U.S. did in the past. That’s a fair point. China has made impressive strides, especially through companies like SMIC and Huawei. Huawei has been developing its own chip designs and working around US sanctions by building domestic supply chains. However, lithography remains their Achilles’ heel. SMIC, China’s leading foundry, is still several generations behind TSMC in process nodes (e.g., SMIC is at 7nm while TSMC is at 3nm and below as of 2025). Without access to EUV, which ASML exclusively provides, China’s ability to compete at the cutting edge is limited. Even if they poach talent or acquire technology, building an EUV system from scratch would take years, if not decades, due to the sheer complexity and ASML’s patent protections.
I wouldn’t completely dismiss Huawei as a long-term risk. They’ve shown resilience, and China’s government is heavily incentivizing self-sufficiency in semiconductors. If they eventually develop a competing technology or find ways to bypass ASML’s moats (e.g., through alternative lithography methods like multi-patterning with DUV), it could pressure ASML’s market position. But for now, I believe ASML’s lead is secure, especially given their near-monopoly on EUV and the trust they’ve built with global chipmakers.
I agree with you that it won’t be easily done (close the gap). But even this market might be disrupted, and I do hope it won’t happen anytime soon, looking at my position in ASML. I need strong years to recover and hopefully get ahead too. ASML is on pole-position, let’s hope they execute the race as spot-on as we expect them to do 😬