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- [00:00]
Indiana University Representative
Indiana University is proving how higher education can create solutions with industry. We're working side by side with industry partners to fuel economic growth that powers a future ready workforce. Explore IU's impact at iu.edu impact.
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Bloomberg Audio Studios Announcer
Bloomberg Audio Studios Podcasts Radio News well, when.
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Podcast Host
ASML introduced its EUV machines, it helped customers move from 7 nanometer chips down to the 3nm nanometer chips now used by the likes of Nvidia and Apple. Its next big test is whether it can transition to what's known as high numerical aperture lithography or high na. These newer EUV machines are aimed at pushing chips below 2nm, giving them even more capabilities considered crucial for future AI applications. The person leading this effort is Chief Executive Officer Christoph Fouquet. In an exclusive interview recorded on November 14th at ASML's headquarters, Fouquet explained why no other company on the planet can do what his can.
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Christoph Fouquet
Lithography will always be there, right? Because you cannot do anything with lithography and there will always be the wish to get better lithography. Better lithography means better resolution, better accuracy and better productivity. And we're going to work basically on those three axes for many, many years. If we look at lithography and SML today, thanks to euv, we most probably know what to do for our customer for the next 10 to 15 years. And the next 10 to 15 years we'll still see major innovation in lithography in order to continue to work with our customer on cost and transistor density. So that's the first thing we do low NA today. We just talked about Ina we may @ some point of time also to introduce even the higher numerical aperture tool which we call HYPRNA. That's the 0.75 tool. Basically we HYPERNA HYPER.
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Interviewer
NA. So this could be. When does Hyperna come.
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Christoph Fouquet
Then? Most probably middle of the next decade. So we still have time. We still have time, but that's still something we are preparing for because as you said, we have to look long.
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Interviewer
Term. You're also pushing into advanced packaging or 3D packaging. And this is essentially where you get the components instead of laying them out flat, kind of Urban Sprawl style, you build them up a bit like a skyscraper. What is the importance of that? How significant will that be for asml and why focus on that.
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Christoph Fouquet
Packaging? Yeah, two reasons why this is becoming important. So the first thing our customers are continuing to drive for more transistor density. So the Moore's Law we usually refer to is calling for doubling transistor density every two years. And this has been going on for many years and still keep going. In fact, if you look at AI customers, you mentioned Nvidia before, they want even more than that. So they don't want to get the transistor density to double every two years. They would like the number of transistors to go up by a factor of 16 every two years. That's what we have seen happening in the last two, three years. So you're going completely off Moore's law and you need even more transistor. Now we still use lithography to try to put as many transistor as possible per unit of area, but that's not enough. And if you cannot get enough transistor, as you show doing this, then you also have to do.
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Interviewer
That. On AI. You made a big step by investing almost one and a half billion USD in Mistral, which is one of the leading large language model companies in Europe, certainly a competitor to the likes of OpenAI and Gemini and Anthropic. You've taken about a 10% stake with that deal.
- [04:02]
Christoph Fouquet
Why? Well, we saw AI as also a huge opportunity for ASML. If you look at ASML, we invest a lot in R&D, four and a half billion euro every year to develop our product. And of course we invest a lot in hardware. We also invest a lot of software. And we saw that when it comes to development cycle, AI could help us enormously. And with the software, of course, like many company, but you know, for us to be able to ship our machine to our customer and have people to maintain those machines on the field, we are writing a huge amount of procedure, right? We spend a lot of time describing on paper, our tool works so that people can deal with it. And there also AI can help us to really reduce the time our engineers spend on that so that we free them to do other things, like for example, 3D integration. So we saw a major, major efficiency opportunity with AI. More importantly, we also believe that AI can improve our product because our product generates tons of.
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Interviewer
Data. Are we in an AI.
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Christoph Fouquet
Bubble? Well, you know, when people talk about AI bubble, I think I don't know exactly what they mean. And usually I say there's two way to look at it. If you look at the industry, I don't think there is a bubble. So the impact of AI in industry is just starting and the impact on the industry will be positive for many, many years to come. So there, there is no bubble. I think that the value of AI, the industrial value of AI is extremely high. And this will be developing over time. There's no bubble because like I say, we are just starting. Sometimes people talk about a bubble in reference to the stock market because we have seen some company getting extremely high as a result of the excitement of AI there. I think what you will see is more players coming over time. So initially a few companies where I would say very much the only winner out of a. Because of the demand, because industrial, the industrial demand would be so high, we need more players. And you will see more and more companies designing chips, designing AI, product manufacturing chips, etc. Etc. And that could create of course some change on the stock market. But you know, the two are a bit unrelated because that commitment, $300.
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Interviewer
Billion just this year alone from the hyperscalers, maybe 400 billion next year. That translates into real orders for your kids in the years ahead. You start to see that over.
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Christoph Fouquet
Time. And sometime, you know, the last few months I used to joke with some of our investor because they told us why, you know, 200 billion here, 500 billion here. I say, well, I still don't have the equation to translate dose order into order. For us it takes a bit of time. But you're right, over time that demand translates into cheap demand to our customer. Yeah, this translates into a need for more capacity and this translate into demand for ASML and our peers in the.
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Interviewer
Industry. The infrastructure spend from the hyperscalers and the kind of deal making that Open Air has done almost a trillion dollars worth of deals committed just by that one company alone, which isn't making a profit this year. That, that makes sense to.
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Christoph Fouquet
You? Well, I think the investment makes sense overhaul because you cannot play in AI without investing in hyperscaler. And there may be even a few cycle of investment because the investment today is down on certain chips. The chips in two, three years from now, if you look at Nvidia announcement, they would be a lot more powerful and people may be tempted again in 2027 to invest again in hyperscaler to make use of those chips. So you have different cycle and you have a bit of a harm race because if you don't invest today, you're out. That's true for company, I think it's true also for government. You cannot not play in AI and I think that's why you have this huge backlog of.
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Interviewer
Demand. You touched on one part of this which is the pace of innovation and it makes me think of depreciation around some of these assets, particularly when you spend heavily on Blackwell. And then we've got Rubin coming up as one example. Good news for you because you benefit from that increased investment that's going to have to follow that. But some are going to get burned by that depreciating asset.
- [08:37]
Christoph Fouquet
Presumably. Could be, I think, you know, it's a bit what I said. You have a certain landscape. When you start the opportunity is big. You will see more and more players. Will everyone win? I don't know. But the opportunity is such that there will be more and more people entering the business and time will say who makes the right turn, who makes the right decision, the right investment, etc etc. But the opportunity will, I think on the short term you will see first more player and then at some point you may see a consolidation or change. This is very natural in this kind of industry, but it's too big for people to not want to play in.
- [09:16]
Podcast Host
Today. SML CEO Christophe Fouquet this podcast.
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