ASML goes beyond EUV and focuses on packaging

For years, ASML's strategy was crystal clear: we make transistors smaller. With that focus, the Veldhoven-based company acquired a global monopoly on the most advanced chip machines. But the laws of nature cannot be defied indefinitely. Now that the physical limits of miniaturisation are in sight, ASML is expanding its strategy. The new holy grail is not only smaller, but above all, ‘smarter stacking’. The company is fully committed to ‘advanced packaging’, according to reports by Reuters. This market segment is crucial for the future of the semiconductor industry. This strategic expansion is not an experiment, but a necessary evolution to secure dominance in the semiconductor industry for the next fifteen years.

The physical wall and the way out

Moore's Law, the prediction that chips will double in power every two years, is hitting a wall. Transistors are now so small that they can hardly be reduced any further without encountering quantum mechanical problems. The solution no longer lies solely in the flat plane, but in height. By stacking chips, manufacturers can cram more computing power into a smaller area. This process, known as 3D integration or “advanced packaging,” is the key to the next generation of supercomputers. Previously, packaging chips—putting the silicon in a protective casing—was a relatively simple task at the end of the production line. With modern chips, packaging has become part of the performance. Different components, such as memory and computing cores, are stacked on top of each other like Lego blocks. This requires a level of precision that was previously only necessary when manufacturing the chip itself. This is where ASML sees its opportunity: new chips need precise connections to enable stacking.

The weapon ASML is using to enter this new market is the Twinscan XT:260. This machine combines existing ‘i-line’ technology with extreme precision. The device has been specifically adapted to layer layers on top of each other with a deviation of less than 40 nanometers. This is crucial for the complex connections in modern chips.

Why AI is hungry for ‘Advanced Packaging’

The driving force behind this technology is artificial intelligence. AI models such as those from OpenAI and Anthropic devour data. The biggest bottleneck in current systems is not computing speed, but the time it takes to get data from memory to the processor. This phenomenon is known as the ‘memory wall’. By stacking memory chips directly on or next to the processor, the distance that data has to travel is minimised. Techniques such as ‘hybrid bonding’ make this possible. Here, chips are fused together directly via copper atoms, creating up to a million connections per square millimeter. However, this requires the chips to fit together perfectly. A deviation of a fraction of a hair's width causes the connection to fail. ASML's technology is essential for preparing these interconnects. Without this precision, the promised performance gains of AI chips simply cannot be realised.

A strategic change of course for the long term

The move into packaging is more than a technical project; it is a fundamental expansion of ASML's revenue model. Marco Pieters, ASML's new CTO, outlines a vision that looks ten to fifteen years ahead. The company no longer wants to be just the supplier of the machines that expose the chips, but also of the equipment that assembles them. The market for advanced packaging is growing rapidly and offers high margins, in contrast to the traditional packaging industry. This diversification makes ASML less dependent on the sale of EUV machines alone. The company is anticipating a future in which chip size itself will increase—far beyond the current limits of a “postage stamp.” By investing now in machines that can process larger, composite chips, ASML is positioning itself as an indispensable link in the entire chain, from the initial design to the final composite system.

The Dutch connection and the competitive field

ASML is not the only Dutch player in this field. Besi (BE Semiconductor Industries) from Duiven has been a world leader for years in the machines that actually stick chips together, particularly through hybrid bonding. Although investors sometimes fear competition, the technologies complement each other for the time being. ASML provides the lithographic patterns (the ‘road map’ on the chip), while Besi makes the physical connection. Nevertheless, the panels are shifting. With the XT:260, ASML is entering the domain of the ‘back end’, traditionally the playing field of other parties. For American competitors such as Onto Innovation, the message is ominous: the giant from Veldhoven is coming. For investors, the signal is clear. The chip sector moves in cycles, but the structural demand for AI computing power is creating a new wave of investment. Both ASML and Besi started 2026 with strong stock market results, driven by this optimism.