Chips & Semiconductors
Before any AI can run, someone has to build the specialised hardware. Normal chips can't handle it. AI needs to do millions of calculations at once, not one at a time.
The AI ecosystem starts with sand. Specifically, with the silicon that gets refined into wafers, etched into transistors, and shipped as the GPUs that train and run every modern AI model. This layer is dominated by a small number of companies, each of which sits at a chokepoint nobody else has figured out how to bypass. NVIDIA designs the chips. TSMC manufactures them. ASML builds the only machines on earth that can print transistors small enough to matter. Understanding this layer is the single most useful thing you can do to understand the rest of the AI stack.
NVIDIA
Makes the leading AI chip (the GPU). Almost everyone uses them. The arms dealer of the AI war.
AMD
Makes competing chips. Cheaper than NVIDIA and catching up fast.
Intel
Trying to get back in the game after being late to AI. A turnaround story.
TSMC
Actually manufactures the chips NVIDIA and AMD design. Nobody else builds at their scale. The factory everyone depends on.
ASML
Makes the machines that make the chips. One company, total monopoly, Dutch. No ASML, no modern chips.
ARM Holdings
Designs the chip architecture blueprint that almost every device uses. They license the design, they don't build the chips.
Broadcom, Marvell, Credo
Make the networking chips that connect all those AI chips together at speed. The glue between the GPUs.
Micron, SanDisk
Make the memory chips. AI needs to store and retrieve data at extreme speed. These companies make that possible.
Doesn't NVIDIA manufacture their own chips?
No, and this surprises a lot of people. NVIDIA designs the chips but outsources all manufacturing to TSMC in Taiwan. NVIDIA is a fabless company, no factories, just engineers. The same is true for AMD and Apple. The actual physical manufacturing is extraordinarily capital intensive and TSMC has spent decades becoming essentially irreplaceable at it.
What's the difference between a CPU and a GPU?
A CPU (Central Processing Unit) is a general purpose chip. It's fast at doing one thing at a time and handles everything your computer does day to day. A GPU (Graphics Processing Unit) was originally designed for gaming because rendering graphics requires doing thousands of simple calculations simultaneously. It turns out that's exactly what AI needs too, millions of parallel calculations at once. That's why NVIDIA, which dominated gaming GPUs, ended up accidentally dominating AI infrastructure.
Why does everyone keep mentioning Taiwan?
Because TSMC, the company that manufactures most of the world's advanced chips, is based in Taiwan. Taiwan also sits in one of the world's most geopolitically contested regions. If anything were to disrupt TSMC's operations, a natural disaster, a conflict, a blockade, the global AI buildout would effectively stop. This is why the US and EU are spending billions subsidising domestic chip manufacturing. It's not just economics. It's national security.
Does ASML have any competition?
Effectively no, and the reason is one of the more extraordinary stories in modern industrial history. ASML makes the machines that use extreme ultraviolet (EUV) light to etch circuit patterns onto silicon wafers. The light source operates at a wavelength of 13.5 nanometres, just above the X ray range. To generate it, they fire a laser at a tiny tin droplet 50,000 times per second, which creates a plasma that emits the right wavelength of light. Then they focus and direct that light using mirrors so precise that if you scaled them up to the size of Germany, the biggest bump would be less than a tenth of a millimetre high. It took ASML roughly 30 years and billions in R&D to get this working. The supply chain involves over 5,000 suppliers across dozens of countries. A single EUV machine costs around $200 million, weighs 180 tonnes, and ships in roughly 40 freight containers. Canon and Nikon have tried to compete at various points. Neither has cracked EUV. ASML has a monopoly not because regulators gave it to them or because they crushed competitors, but because what they do is so technically complex that nobody else has managed to replicate it after decades of trying. The geopolitical dimension is significant too. The Dutch government, under pressure from the US, now restricts ASML from selling its most advanced machines to China. That single export restriction is arguably one of the most powerful economic weapons in the US China technology war. One Dutch company, making one type of machine, in one city (Veldhoven), is a genuine chokepoint in the global AI race.