--- title: The European Semiconductor Companies the Rest of the World Cannot Replace description: ASML, Zeiss and TRUMPF hold monopolies no competitor can replicate. The EU Chips Act revision bets on strategic indispensability over self-sufficient chip manufacturing. author: Darie Nani (Editor-in-Chief) date: 2026-05-15T06:39:46.574Z updated: 2026-05-15T06:39:46.584Z canonical: https://www.sovereignmagazine.com/article/european-semiconductor-companies-chips-act image: https://cdn.nanimediahouse.com/european-chips-act-featured.webp categories: Science & Tech, Supply Chains content_type: Analysis region: Europe publication: Sovereign Magazine about: - type: Organization name: ASML --- The European Union has spent the past three years learning an expensive lesson about semiconductor ambitions. Its original [Chips Act](https://www.sovereignmagazine.com/article/swiss-startup-chipmind-says-europe-s-43bn-chip-bet-missed-the-point), passed in 2023, set a target of doubling Europe's share of global chip production to 20% by 2030. A European Court of Auditors report published in 2025 found the bloc was on track for roughly 11.7%, a figure that would require a fourfold increase in production capacity to hit the original target. The auditors concluded the goal was not realistic. Rather than doubling down on an unachievable number, the EU appears to be changing the question entirely. Industry bodies, think tanks and member state governments have coalesced around a different concept: strategic indispensability. The idea is straightforward. Europe cannot match the fabrication subsidies of the United States, Taiwan or South Korea. What it can do is ensure the rest of the world cannot make advanced chips without European technology. That bet is not theoretical. It rests on a handful of companies, most of them based within a few hundred kilometres of each other in northwest Europe, that already hold positions no competitor can replicate within any plausible timeframe. ## How ASML Built a Monopoly That No Subsidy Can Buy The most obvious case is ASML, the Dutch company that holds a 100% monopoly on extreme ultraviolet lithography. EUV uses 13.5-nanometre wavelength light to print chip features below 7 nanometres. Without EUV, there are no modern AI processors, no leading-edge smartphone chips, and no path to the sub-3-nanometre nodes that TSMC and Samsung are racing to bring online. ASML shipped 48 EUV systems in 2025, alongside 131 older immersion lithography tools. Full-year revenue hit a record 32.7 billion euros, with a backlog of 38.8 billion euros stretching into 2027. Its latest High-NA EUV machine, the EXE:5200, sells for between $350 million and $400 million per unit, making it the most expensive single piece of industrial equipment ever manufactured. No competitor exists. Nikon and Canon abandoned EUV research years ago. The barrier is not money but accumulated knowledge: more than 30 years of iterative development, tens of billions of euros in R&D, and a supply chain of roughly 5,000 specialist vendors. Even with unlimited capital, a new entrant could not compress the learning curve. [China](https://www.sovereignmagazine.com/article/why-software-controls-could-reshape-the-global-chip-industry)'s share of ASML's revenue peaked at 36% in the fourth quarter of 2025 before falling to 19% in the first quarter of 2026 as tightened export controls took effect. Beijing has never received a single EUV machine. ## The European Semiconductor Supply Chain Behind Every ASML Machine ASML does not work alone. Each EUV system depends on two German companies whose contributions are as irreplaceable as the machine itself. Zeiss SMT, based in Oberkochen, manufactures every mirror optic inside every ASML lithography system. EUV light is absorbed by conventional glass lenses, so the entire optical path uses reflective mirrors polished to a surface accuracy of approximately 50 picometres, or 50 trillionths of a metre. Zeiss's own illustration: if one of its mirrors were scaled to the size of Germany, the largest surface irregularity would measure 0.1 millimetres. These are the smoothest artificial surfaces in existence. The semiconductor manufacturing technology division generated 5.05 billion euros in fiscal 2024/25, and the company estimates that 80% of all microchips worldwide are made using Zeiss optics. ASML owns a 24.9% stake in Zeiss SMT, purchased for one billion euros in 2016. The relationship is exclusive and deeply integrated. No secondary supplier exists. The third member of the trinity is TRUMPF, a family-owned industrial laser company in Ditzingen. TRUMPF builds the CO2 drive laser that generates EUV light by firing 50,000 pulses per second at tiny tin droplets in a vacuum chamber, creating a plasma at roughly 220,000 degrees Celsius. At 30 kilowatts, it is the most powerful pulsed industrial laser in the world. TRUMPF generated 4.3 billion euros in revenue in fiscal 2024/25, with its laser technology division contributing 1.2 billion euros. As with Zeiss, the EUV laser is single-sourced. No alternative exists anywhere. A senior TRUMPF executive described the three-way collaboration as "like being part of a single company." All three are headquartered within a few hundred kilometres of each other in the Netherlands and southwest Germany. Any disruption to Zeiss or TRUMPF would halt EUV machine production globally. There is no workaround. ## European Semiconductor Companies With Quiet Monopolies Most People Have Never Heard Of The choke points extend well beyond the ASML supply chain. Soitec, headquartered near Grenoble, controls an estimated 70% to 80% of global silicon-on-insulator wafer production. SOI wafers place an ultra-thin crystalline silicon layer on top of an insulating oxide, reducing energy leakage and improving chip performance. The technology is critical for 5G radio-frequency front-ends, automotive power chips and, increasingly, silicon photonics in AI data centres. Soitec's proprietary Smart Cut process, patented in the early 1990s, has accumulated enough surrounding intellectual property to make designing around it impractical. Revenue reached 891 million euros in fiscal 2025. EV Group, an Austrian firm, holds approximately 82% of the global market for wafer bonding equipment. Advanced memory chips, CMOS image sensors and logic below 7 nanometres all depend on wafer-on-wafer bonding from EV Group's machines. The company is privately held and rarely discussed outside specialist semiconductor circles. IMS Nanofabrication, also Austrian, manufactures the multi-beam mask writers used to fabricate more than 98% of all production EUV photomasks. Without masks, an EUV lithography machine cannot pattern a single wafer. IMS holds over 95% of the production multi-beam mask writer market. VAT Group, listed in Switzerland, commands approximately 75% of the global market for vacuum valves used in semiconductor manufacturing. Every deposition, etching and cleaning chamber in a fabrication plant requires vacuum valves. VAT reported revenue of 942 million Swiss francs in 2024. Aixtron, a German company, holds roughly 70% of the global market for metal-organic chemical vapour deposition equipment and approximately 90% of the market for gallium nitride epitaxy at 200-millimetre wafer sizes. These machines grow the crystal layers that underpin the power semiconductors made by companies such as Infineon and STMicroelectronics. ## How Europe's Largest Chipmakers Are Positioned in Power Semiconductors and Automotive Europe's own chip fabricators are not leading in advanced logic nodes, where [TSMC and Samsung dominate](https://www.sovereignmagazine.com/article/tsmc-s-ai-chip-leadership-drives-taiwan-s-semiconductor-dominance). Their strength is in power semiconductors, automotive chips and industrial sensors, markets where process technology matters more than raw transistor density. Infineon Technologies, based in Munich, is the world's largest automotive semiconductor company for the sixth consecutive year, with 12.8% of a $74.4 billion global market. It is also the global leader in power semiconductors across silicon, silicon carbide and gallium nitride. In 2024, Infineon became the world's largest microcontroller supplier overall, with 21.3% global market share. Full-year revenue was 14.6 billion euros. The company opened what it describes as the world's most competitive 200-millimetre silicon carbide fabrication plant in Kulim, Malaysia, in August 2024, and produced the first 300-millimetre gallium nitride power semiconductor wafer in September of the same year. NXP Semiconductors, based in Eindhoven, generated $12.27 billion in 2025, with 58% of revenue from automotive customers. NXP's position is strongest in in-vehicle networking, radar processors for advanced driver assistance, and secure transceivers. The company was spun out of Philips Semiconductors in 2006. STMicroelectronics, the Franco-Italian-Swiss group headquartered in Geneva, reported $11.8 billion in 2025 revenue. Its principal strengths are in silicon carbide power devices, sensors and, more recently, silicon photonics. In February 2026, STMicro announced a multi-year deal with Amazon Web Services for its PIC100 photonics chip, valued at over one billion dollars. ## What the European Chips Act Revision Actually Changes for Semiconductor Policy The policy framework is catching up to the industrial reality. The original Chips Act concentrated subsidies on "first-of-a-kind" mega-fabrication plants. In practice, this meant channelling state aid toward a small number of large projects, most prominently Intel's planned facility in Magdeburg, Germany, which has faced repeated delays. Industry coalitions including DIGITALEUROPE and SEMI Europe have pushed to broaden the definition of eligible investments. Their proposals call for funding to cover the modernisation of existing fabrication plants, upstream equipment and materials development, and chip design capabilities. The objective is to stop subsidising individual factories in isolation and start reinforcing the broader ecosystem that makes Europe difficult to replace. There is a related push to coordinate export controls at EU level rather than leaving them fragmented across 27 national regimes. At present, each member state operates its own export licensing system for semiconductor technology, a structure that leaves smaller countries vulnerable to diplomatic pressure from major trading partners. Think tanks such as Bruegel and the Centre for Future Generations have proposed a hybrid model similar to the EU's foreign direct investment screening framework. DIGITALEUROPE has proposed a total mobilisation target of 200 billion euros in combined EU, national and private investment in semiconductors by 2035, anchored by a proposed EU public budget of at least 20 billion euros. These are industry proposals, not committed appropriations. No formal legislative draft for a revised Chips Act has been published; the European Commission's evaluation is due by September 2026. ## Why Strategic Indispensability Is a Defensive Bet on the Semiconductor Supply Chain The logic of indispensability is essentially defensive. If China or any other power were to restrict chip access to Europe, the EU could, in principle, restrict the critical tools and materials those chips require. ASML's EUV monopoly is the most visible example, but the same leverage applies to Zeiss optics, TRUMPF lasers, Soitec wafers, EV Group bonding equipment and the rest of the upstream supply chain. Whether this leverage endures depends on two things. First, whether European firms maintain their technological leads. ASML's High-NA EUV programme and IMEC's work on sub-2-nanometre process technology suggest the pipeline remains strong. IMEC, the Belgian semiconductor research centre, generated 1.2 billion euros in revenue in 2025 and recently secured 2.5 billion euros in EU Chips Act funding. It remains the only institution outside the three major foundries that operates a complete pilot line at leading-edge nodes. Second, whether the EU can actually use this leverage in a crisis. Export controls on ASML's DUV equipment to China have been implemented, but the broader question of coordinated, rapid EU-wide export restrictions remains untested. The distance between having choke points and being willing to squeeze them is considerable. The EU cannot make its own advanced chips at scale. What it can do, and what the revised Chips Act appears designed to ensure, is remain the place without which nobody else can make them either. ## FAQ **Q: What is strategic indispensability in the context of the European Chips Act?** Strategic indispensability is the policy concept underpinning the EU's proposed Chips Act revision. Rather than pursuing self-sufficient chip manufacturing, the EU aims to ensure that global semiconductor production depends on European technology, equipment and materials. The strategy leverages existing European monopolies in areas such as EUV lithography (ASML), semiconductor optics (Zeiss) and specialised wafer production (Soitec). **Q: Why did the EU abandon its 20% semiconductor market share target?** A European Court of Auditors report in 2025 found the EU was on track for approximately 11.7% of global chip production by 2030, well below the 20% target set in the original 2023 Chips Act. Meeting the target would have required a fourfold increase in production capacity. High energy costs, labour shortages and the scale of competing US and Asian subsidies made the goal commercially unviable. **Q: Which European semiconductor companies have monopoly positions in the global supply chain?** ASML holds 100% of the EUV lithography market. Zeiss SMT is the sole manufacturer of EUV mirror optics. TRUMPF is the sole manufacturer of EUV drive lasers. Soitec controls 70-80% of SOI wafer production. EV Group holds 82% of wafer bonding equipment. IMS Nanofabrication makes over 98% of EUV photomasks. VAT Group holds 75% of semiconductor vacuum valves. **Q: What is the ASML-Zeiss-TRUMPF relationship?** ASML, Zeiss SMT and TRUMPF form a tightly integrated supply chain for EUV lithography. ASML owns 24.9% of Zeiss SMT. Both Zeiss optics and TRUMPF lasers are single-sourced with no alternative suppliers. The three companies co-develop each generation of EUV technology and are headquartered within a few hundred kilometres of each other in the Netherlands and Germany.