So here’s the deal: there’s this Dutch company called ASML that basically owns the entire world when it comes to making the machines that make AI chips. And when I say “owns,” I mean they have a monopoly so tight it makes your local cable company look competitive.
For over 20 years, ASML has been the only game in town for something called EUV lithography – think of it as the world’s most expensive and precise 3D printer, except instead of making plastic trinkets, it prints transistors smaller than a virus. These machines cost hundreds of millions of dollars each, and without them, you can’t make the cutting-edge chips that power ChatGPT, your iPhone, or basically anything “smart” these days.
But here’s where it gets interesting. The Trump administration looked at this situation and basically said, “Hey, maybe having zero domestic capability in the most critical technology for AI isn’t great for national security.” So they’re throwing $150 million at a startup called xLight to shake things up.
Enter the Underdog (Sort Of)
xLight isn’t trying to build ASML-killer machines from scratch – that would be like trying to reinvent the airplane when you just need better engines. Instead, they’re working on revolutionary light sources using “free-electron lasers powered by compact particle accelerators.” I know, it sounds like something from Star Trek, but stick with me.
The current ASML machines use 13.5 nanometer wavelengths. xLight is aiming for 2 nanometers. To put that in perspective, that’s like upgrading from a crayon to a mechanical pencil when you’re trying to draw the Mona Lisa on a grain of rice.
This could potentially double transistor densities and cut processing costs by 30-40%. Translation: faster, cheaper AI chips that use less energy. The catch? They’re not planning to ship anything until 2028, which in tech years is basically the Mesozoic Era.
Plot Twist: They’re Actually Friends
Here’s the kicker – xLight doesn’t want to destroy ASML; they want to make ASML’s machines even better. It’s like adding a turbo engine to a Ferrari instead of building a whole new car. Pat Gelsinger (yes, the guy who got unceremoniously booted from Intel) is backing this approach, calling it a way to “revive Moore’s Law from its nap.”
ASML isn’t exactly sweating either. They’ve got a $300 billion order backlog because everyone and their grandmother wants AI chips. Even with China export restrictions cramping their style, demand is through the roof.
The Bottom Line
ASML’s monopoly isn’t going anywhere anytime soon. If anything, xLight might just make it stronger by supercharging their existing machines. It’s like having the only highway in town and then someone comes along to add more lanes instead of building a competing road.
For investors, this is actually good news. ASML keeps its dominant position while potentially getting even more efficient. And if xLight delivers on their 2028 promises, we might see the next generation of AI hardware that makes today’s chips look like pocket calculators.
Sometimes the best way to beat a monopoly isn’t to fight it – it’s to make it work better for everyone.