By Leo Sun
Publication Date: 2026-10-16 18:55:00
Nvidia (NVDA -1.37%) and TSMC (TSM -2.14%) are often considered the bellwethers of the AI chip market. Nvidia, the world’s largest producer of discrete GPUs for data centers, provides the best “picks and shovels” for the AI gold rush. TSMC, the world’s largest and most advanced contract chipmaker, manufactures Nvidia’s chips. It also serves other fabless AI chipmakers, including AMD (AMD -5.47%) and Broadcom (AVGO -4.02%).
Therefore, if Nvidia stopped developing new AI chips and TSMC stopped manufacturing them, the AI market would grind to a halt. However, neither company could produce new chips without ASML (ASML -0.57%) — the real bottleneck in the AI supply chain.
Image source: Getty Images.
Why is ASML the “real” bottleneck in the AI chip market?
ASML, which is based in the Netherlands, is the world’s largest producer of lithography systems. These systems enable chip foundries, like TSMC, to optically etch circuit patterns onto silicon wafers. It dominates the market for lower-end deep-ultraviolet (DUV) lithography systems, which are used to produce older, larger chips. It’s also the only producer of high-end extreme ultraviolet (EUV) systems, which are used to produce the world’s smallest and densest chips.
ASML began developing its first EUV systems nearly three decades ago, giving it a major first-mover advantage against its industry peers. These massive systems cost between $200 million and $400 million, require multiple planes to ship, and must be assembled…
