Organisational Investment: The Case of ASML—Can the Product Make the Producer?

Published date01 February 2023
Date01 February 2023
Subject MatterArticles
Organisational Investment:
The Case of ASML—Can
the Product Make the
An-Chi Tung1 and Henry Wan, Jr.2
This study showcases the specific inspiration from Professor Kemp by focusing
on one particular firm—ASML, a Dutch lithography company. It has become the
only producer to launch a group of products, the extreme ultraviolet (EUV) sys-
tems for advanced integrated circuits (ICs). Such success is relatively new and is
due to a single, unprecedented multi-year programme, Customer Co-investment
Program CCIP), since 2012. This programme accelerated ASML’s development
of EUV, which has marginalised the other two rivals and former market lead-
ers, Nikon and Canon, that they can only compete in the less advanced DUV
and i-line systems. The article explores a number of interrelated aspects about
the selected case. It discusses how economic theories offer tools into the crux
of the matter. It then reviews technical and historical facts to facilitate further
understanding. Next, the article considers two main issues: Is the ASML’s claim
that CCIP is necessary based on the financing requirement linked to the new
technology true? And is the outcome good? The first question is analysed by four
inter-related levels of information asymmetry, and the second is discussed at a
broader level. Finally, the article explains how Kemp and Shimomura inspires the
analysis here of the illustrative case of ASML.
JEL Codes: D22, D23, D82, L22, L63
ASML, EUV, lithography, CCIP, organisational investment, information asymmetry
Foreign Trade Review
58(1) 176–191, 2023
© 2022 Indian Institute of
Foreign Trade
Reprints and permissions:
DOI: 10.1177/00157325221127606
1 Institute of Economics, Academia Sinica, Taipei, Taiwan.
2 Department of Economics, Cornell University, Ithaca, New York, USA.
Corresponding author:
Henry Wan, Jr., Department of Economics, Cornell University, Ithaca, New York 14850, United States.
Tung and Wan, Jr. 177
We come to honour Professor Murray Kemp. His seminal texts (Kemp, 1964,
1969) transformed the trade field into an analytic study; his voluminous papers
broadened in various ways the assumptions of trade to benefit further research
(Wan & Long, 1998). As the mark of a great economist, his distinct impact would
inspire researchers yet to be born and in areas beyond his lifetime concerns: inter-
national economics, resource exploitation and so on. Such expectations appear
likely. His lifelong fidelity to both deductive rigour and practical relevance stand
out among his peers.
Given that memories of ordinary research might not last long for readers of
specialized interest and brief memory, we now claim what Professor Kemp
inspired concerns broadly applicable means for research, like applicable spades
for coal within reach, and not coal itself, in general.
Such unusual acclamation can never be offered for free. As a high bar, the
Sagan Standard states that extraordinary claims require extraordinary evidence
(ECREE). We alone would be ridiculed, should our attempt to acclaim falls short,
since Professor Kemp, a paragon of modesty, never laid claim on what we pro-
posed, though he deserves it. The proof of the pudding is eating it, which would
be seen below.
For us economists, there are current issues too important to leave aside, yet
they may pose serious challenges to conventional instruments of our discipline.
To wit, from Kemp (1964) to Kemp (1969), the evolution highlights the signal
importance of investment in open economies in modern growth, and beyond the
neoclassical realm of Samuelson, involving information asymmetry, outside the
canon of Debreu (1959), as in Kemp et al. (2001). This is not a wild-goose chase
after fashion, but to meet the charge by society to the economics profession: offer-
ing analysis on decisions, for firms, economies or world.
Our evidence is about one particular firm, the ASML Holding N.V. (or ASML).
It is the only producer in the world to launch a group of products, the extreme
ultraviolet (EUV) printers for advanced integrated circuits (IC). With hundreds of
thousands of parts from nearly 800 global suppliers (Schoolov, 2022), an EUV
equipment is colossal (about 180 tons),1 pricey (€144 million per unit) and also
‘the most complicated machine humans have built’ (Clark, 2021).2 Chip produc-
ers for leading-edge semiconductors need it, and ASML, its only supplier, now
becomes the largest European technology firm by market value.
Such success is a relatively new phenomenon and is owed to a single, multi-
year Customer Co-investment Program (CCIP), launched in 2012 by ASML. The
programme has accelerated ASML’s development of EUV, which is extremely
expensive and risky, with major investments from Intel, Samsung and TSMC.
Eventually ASML’s breakthrough in EUV has marginalised the other two rivals
and former market leaders, Nikon and Canon, who can only compete in less
advanced outputs: deep ultraviolet (DUV) and i-line systems. Further, ASML not
only grew together with its suppliers but also allowed its three major clients (the
participants in CCIP) to outdo their rivals, like GlobalFoundries, by using EUV
tools for the most advanced chips (Schoolov, 2022).

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