ASML's incoming CEO Christophe Fouquet's biggest challenge will be leading the company into a new era where the firefighting engineering culture must change.

Martin van den Brink and Peter Wennink will leave in a few months, marking the end of an era. Together they held the top job at ASML for more than a decade. Van den Brink is responsible for development, constantly pursuing the latest technologies to meet customer needs. Co-CEO Winnick is in charge of finance and serves as the company’s diplomat. He also cares about his employees, from the factory floor to the top.

2024 and April are symbolic: it will be ASML's fortieth anniversary. Van den Brink was hired by Philips shortly before the ASML spin-off and has spent his entire career at the lithography company. Because of the way he led the development of the technology, ASML rose to stratospheric heights. Today, no company in the world has comparable market position and (yet) impressive technological leadership. It's hard to imagine ASML having to cede this position to a competitor in the foreseeable future.

1. Impact of world competition

ASML's impact extends beyond financial markets and the economic implications of information technology.

The company's rising strategic importance has attracted the attention of politicians. It puts the Netherlands and Europe in the spotlight and provides Dutch politicians in Brussels with bargaining chips. The superpower from Wildhoven has also been a driving force behind the rising stars of Breenport in the south of the Netherlands. This high-tech region now matches the economic and political importance of the Port of Rotterdam and the Netherlands' traditional strengths in trade and services. That's for historians to decide, but as far as I'm concerned, Martin van den Brink thus accomplished a greater feat than Anton and Gerard Philips combined.

2024 also marks the end of more than a decade of strong growth. Last quarter's results suggest that ASML isn't as recession-proof as thought. Growth is leveling off. Van den Brink and Wennink's farewell thus also marks the end of a period when ASML seemed unstoppable and actually worked wonders. The company had a technology up and running that leading experts had publicly expressed skepticism about.

2. Next few decades

The question now is what the next few decades will bring.

So far, ASML has gone through approximately four eras. The first eight years, until about 1992, were all about survival. During this period, ASML failed to launch unique products such as the PAS 2500. Philips provided funding at the time to keep its subsidiary afloat.

With the highly modular machine PAS 5500, developed under Van den Brink, ASML began to capture market share. This puts it on the same level as Canon and Nikon from the turn of the century. After that, the second period ends.

The arrival of Doug Dunn ushered in the professional era of ASML. With the acquisition of SVG, ASML became a big player and started looking for companies like Masktool and Brion to strengthen its technology portfolio. The company began investing in a holistic approach, a suite of software and metrology hardware, to make its lithography machines more efficient. After being named CFO in 1999, Wennink immediately initiated a significant expansion of the finance department. Some old-timers were initially dismissive, but the unrest later proved them wrong.

3. Next generation

The turn of the century also marked the selection of extreme ultraviolet lithography as the next-generation lithography technology (NGL).

Formally, ions or electrons were also considered for NGL chip production at the time, but were never taken seriously. Van den Brink had the strategic insight to believe that optical technology was the way to go.

After a few years, 157nm lithography was abandoned in favor of immersion lithography, an extension of 193nm with a water film between the lens and the wafer. The expansion of the 193nm toolbox has proven to significantly extend the life of the technology. Developing optics and error-free imaging processes was not an easy task, but after 2006, water-assisted imaging gained momentum and started generating significant profits.

In addition to good profitability, immersive technology combined with improved alignment, throughput and overall technology allows chipmakers to continue scaling as EUV struggles to mature. The industry must employ expensive multi-patterning processes to maintain Moore's Law, but it does work. Multi-patterning boosts sales and market share to unprecedented levels.

4. Coming of age

The third phase ends with EUV maturation.

Around 2018, Apple and TSMC decided to take a chance: They would use EUV to make their next iPhone chips. There is excitement in the Veldhoven building: we are shipping twenty units to Taiwan!

By occupying a leading position in technology, ASML is insulated from the effects of economic downturns. Chipmakers can't ignore Veldhoven's machines. Those left behind paid the price. Case in point: Intel ceded its technology leadership to TSMC.

In the fourth period, EUV becomes a mature technology. It's much the same story with high numerical apertures - I'll try to keep it short.

5. The fifth stage of life

What can we expect in the fifth phase of ASML's life?

The company claims that Christophe Fouquet will also take over Van den Brink's duties, but this seems unlikely. The responsibilities of those who have dominated technology for the past four decades are likely to fall to a group of individuals. ASML has plenty of talent that can do the job, but it will be difficult to follow Van den Brink's stature and reputation. By keeping these individuals out of the spotlight, ASML frees them from the burden of being compared to those deemed unlikely to succeed.

On the other hand, it's worth debating whether ASML needs another Van den Brink. His tenure has been characterized by a relentless pursuit of chip size, and no matter which way you look at it, in the next ten, maybe fifteen years, we will see the end of this powerful mechanism. This calls for a different kind of leader, one who can solidify ASML's position in the new market dynamics.

6. Subtle shift

ASML's narrative on Moore's Law has evolved during public appearances such as analyst meetings and quarterly results.

It's less about improving the performance of chips and more about advancing the systems built from those chips. This is a bit hard to explain – one of the challenges for future leadership.

As a near-monopoly, it won't make much difference whether the next generation of EUV machines (High NA) or upcoming variants (Hyper NA) end the contraction. It's true that researchers and engineers at Veldhoven and at research centers around the world aspire to build the ultimate lithography machine, but ultimately the laws of economics will dictate which machines are needed. ASML will sorely miss someone who excelled in analyzing and supporting such decisions.

7. Reliability

Which brings us to the challenge facing incoming President and CEO Christophe Fouquet.

His first priority will be to ensure that chipmakers can extract the highest possible profits from ASML's machines. This means higher reliability and yield. Traditionally, the former has not been a priority due to rapid chip generations and Van den Brink's focus on technology.

Reliability is still not in the vocabulary of the average ASML engineer. Every machine that leaves Veldhoven is different and needs change. ASML is well aware of this. In recent years, it has begun to focus more on predictability, configuration management, and product lifecycle management.

As we all know, Van den Brink inherently dislikes this "boring" process. Therefore, they were not part of the company's DNA for a long time. However, it's always right to make it your first priority to have the next machine ready in a timely manner. Nikon did prioritize reliability but failed in the market.

But times are changing. As technology reaches its limits, the rules of the game change. ASML has begun to increase its market resilience. With its efficient DUV machines, it leaves little wiggle room for Nikon and Canon. To keep its customers happy, Veldhoven must also start offering EUV machines that are equally reliable and efficient – downtime is extremely costly.

8. What are the top priorities?

However, it wasn't easy for Fouquet and his team to transform an organization driven by inventions and engineering into a process-first company. This will bring more bureaucracy.

Die-hard developers will have to get used to this, but Fouquet can woo his engineers by arguing that the more reliable and productive ASML's machines are, the more scope there will be for new generations of machines they can enjoy. It roughly means "If you guys do a good job, Hyper-NA will be an option; if you guys do a good job, hyper-NA will be an option; if things are unreliable, we will be forced to focus all our efforts on excluding EUV and high A glitch in numerical aperture.”

Last week, I heard an analyst claim that multi-pattern EUV could be cheaper than a single exposure of high numerical aperture. So Wildhofen still has a lot of work to do.

9. Lathes

Even the historic lathe continues to be used and improved. 

If no other lithography technology emerges that can continue to accelerate the development of information technology, optical and EUV lithography will continue for decades, and ASML will be able to dominate the pace of innovation.

Fouquet and his team must engage in a complex game to ensure that their organization does not become more arrogant and complacent. He also had to answer the phone when Thierry Breton or the future Prime Minister of the Netherlands called.

10. Entering the era of French rule

ASML already has a French guy in charge who wants to provide customers with a more predictable and reliable product. 

Shortly after Eric Meurice took over, he urged his engineers to change course after talking to unhappy customers. In his second term, he tried to create a department to ensure that chipmakers had access to the exact same scanners they had installed a month earlier. But this sort of thing isn't a priority for Van den Brink and his team. They need all the resources to get new technology up and running.

Meurice was right, but he reluctantly adjusted the attitude of ASML engineers. Maybe he was just ahead of his time. Regardless, Morris failed to get D&E (Development and Engineering) to support his industrialization initiative.

By now, things have changed. If ASML cannot catch up with predictability and reliability, the semiconductor industry will begin to protest. If the move does succeed, the company itself will be a major beneficiary - it is adopting a business model that shares customer revenue.

In this respect, Van den Brink's departure comes at the right time. It is almost impossible to overstate his importance to ASML, but a different set of priorities is now required. The challenges are many, but bringing next-generation scanners to market as quickly as possible is not one of them. ASML's D&E 2.0 requires more structure, fewer projects, and more processes. This can only be achieved under new leadership.

From this, we can foresee that the nature of ASML will undergo profound changes in the next decade. After all, the D&E organization led by Van den Brink is the heart of the company. The departure of not only Van den Brink, but also hundreds of employees (who will retire in the coming years) will fundamentally change ASML's innovation machine. We're talking about those men - sorry, they're almost all men - who are always ready to put out a raging fire, even at night, on the other side of the world.

This firefighter culture will transform into a more bureaucratic organization where predictability and reliability are prioritized. We're talking about a company where employees are accustomed to earning significantly higher salaries than their colleagues in surrounding companies. In such organizations, arrogance and politics lurk - Philips in the 1970s and beyond is a famous example. Perhaps this is Fouquet's biggest challenge: ensuring a winner's mentality in a global company where number one has been taken for granted for two decades.

Fouquet must bring change to the top company, where he has been working for 15 years. This is good because he understands DNA. On the other hand, he must change entrenched patterns, and may not spare anyone, including himself, in the process.

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