{"video_id":"fp_ghySqpXmME","title":"A Possible Explanation For The Price of High End Chips - Nvidia, TSMC, ASML and a Lack of Competition","channel":"Linus Tech Tips","show":"Linus Tech Tips","published_at":"2025-12-20T03:51:00.048Z","duration_s":622,"segments":[{"start_s":0.0,"end_s":3.86,"text":"Computers keep getting more expensive. Why? Take a look at this.","speaker":null,"is_sponsor":0},{"start_s":3.86,"end_s":7.64,"text":"That right there, that's an NVIDIA GPU. Can we talk about NVIDIA, please?","speaker":null,"is_sponsor":0},{"start_s":7.64,"end_s":11.8,"text":"Cause I'm dying to talk about NVIDIA. NVIDIA has got the GPU market cornered","speaker":null,"is_sponsor":0},{"start_s":11.8,"end_s":14.92,"text":"and they're charging like it, but they're a fabless chip company.","speaker":null,"is_sponsor":0},{"start_s":14.92,"end_s":18.02,"text":"They're fabs, they don't exist.","speaker":null,"is_sponsor":0},{"start_s":18.02,"end_s":23.12,"text":"See, they get their chips from TSMC, Taiwan, Taiwan.","speaker":null,"is_sponsor":0},{"start_s":23.12,"end_s":27.4,"text":"Right there. They have the only fabs and they're charging like it.","speaker":null,"is_sponsor":0},{"start_s":27.4,"end_s":30.84,"text":"But guys, you think it stops there? No, we ain't anywhere near the top.","speaker":null,"is_sponsor":0},{"start_s":30.84,"end_s":34.8,"text":"See, ASML, they don't have the fabs, but they have the machines,","speaker":null,"is_sponsor":0},{"start_s":34.8,"end_s":42.12,"text":"the machines to make the fabs, to make the chips. And those machines, they're $200 million.","speaker":null,"is_sponsor":0},{"start_s":42.6,"end_s":46.72,"text":"There's no competition, no competition all the way to the top.","speaker":null,"is_sponsor":0},{"start_s":46.72,"end_s":49.84,"text":"What do you say about that?","speaker":null,"is_sponsor":0},{"start_s":49.84,"end_s":54.6,"text":"I mean, yeah, that's a problem. You're damn right it is.","speaker":null,"is_sponsor":0},{"start_s":55.6,"end_s":58.84,"text":"And what do you say about our sponsor?","speaker":null,"is_sponsor":0},{"start_s":68.52,"end_s":73.56,"text":"Here's the less manic and more thorough version. Over the last 20 years, NVIDIA's market share","speaker":null,"is_sponsor":0},{"start_s":73.56,"end_s":76.64,"text":"of discrete GPUs has climbed to 92%.","speaker":null,"is_sponsor":0},{"start_s":76.64,"end_s":80.2,"text":"Now that alone doesn't make them a literal monopoly,","speaker":null,"is_sponsor":0},{"start_s":80.2,"end_s":83.2,"text":"but what it does do is it allows them to act like one.","speaker":null,"is_sponsor":0},{"start_s":83.2,"end_s":87.44,"text":"I mean, think about it. AMD has fallen to a measly 7%","speaker":null,"is_sponsor":0},{"start_s":87.44,"end_s":90.48,"text":"and Intel only just broke the 1% barrier","speaker":null,"is_sponsor":0},{"start_s":90.48,"end_s":94.36,"text":"after three painful years in the market. So who's gonna stop them?","speaker":null,"is_sponsor":0},{"start_s":94.36,"end_s":97.88,"text":"Nobody. So thanks, at least in part,","speaker":null,"is_sponsor":0},{"start_s":97.88,"end_s":102.92,"text":"to their dominant position in the market, NVIDIA has dramatically ratcheted up their pricing","speaker":null,"is_sponsor":0},{"start_s":102.92,"end_s":106.02,"text":"over the years, pushing their flagship consumer GPUs","speaker":null,"is_sponsor":0},{"start_s":106.02,"end_s":111.02,"text":"from just $500 back in 2010 to $2,000 today","speaker":null,"is_sponsor":0},{"start_s":111.74,"end_s":115.34,"text":"with premium variants that cost much more than even that.","speaker":null,"is_sponsor":0},{"start_s":115.34,"end_s":119.74,"text":"I mean, it's no wonder then that consumers are resentful, even angry about it.","speaker":null,"is_sponsor":0},{"start_s":119.74,"end_s":122.78,"text":"Not angry enough to buy a radio, mind you,","speaker":null,"is_sponsor":0},{"start_s":122.78,"end_s":127.34,"text":"but angry enough to complain online. And I get it.","speaker":null,"is_sponsor":0},{"start_s":127.34,"end_s":130.38,"text":"We've become hooked on ever cheaper technology,","speaker":null,"is_sponsor":0},{"start_s":130.38,"end_s":137.1,"text":"even in the face of high inflation. But as it turns out, there's actually more of a reason","speaker":null,"is_sponsor":0},{"start_s":137.1,"end_s":141.78,"text":"for NVIDIA's pricing than just their desire for more money.","speaker":null,"is_sponsor":0},{"start_s":141.78,"end_s":148.38,"text":"See, neither AMD nor NVIDIA actually manufactured GPUs, the chips.","speaker":null,"is_sponsor":0},{"start_s":148.38,"end_s":151.38,"text":"They don't even own the fabrication plants that make them.","speaker":null,"is_sponsor":0},{"start_s":151.38,"end_s":157.14,"text":"Even Intel, who does own fabs, doesn't manufacture cutting edge GPUs in their fabs.","speaker":null,"is_sponsor":0},{"start_s":157.14,"end_s":161.14,"text":"In fact, all three of the players in the GPU space","speaker":null,"is_sponsor":0},{"start_s":161.14,"end_s":165.78,"text":"source from a single company called Taiwan Semiconductor Manufacturing Company,","speaker":null,"is_sponsor":0},{"start_s":165.78,"end_s":169.82,"text":"or TSMC. They also aren't a literal monopoly.","speaker":null,"is_sponsor":0},{"start_s":169.82,"end_s":175.22,"text":"Samsung and others have done their best to keep up over the years, but like NVIDIA,","speaker":null,"is_sponsor":0},{"start_s":175.22,"end_s":181.34,"text":"they have outcompeted their competition to the point where they are the only viable fabricator","speaker":null,"is_sponsor":0},{"start_s":181.34,"end_s":186.62,"text":"for the cutting edge chips that power the latest gaming GPUs and AI accelerators.","speaker":null,"is_sponsor":0},{"start_s":186.62,"end_s":192.66,"text":"That's not because nobody else could build them. Intel, for instance, has access to the very same equipment","speaker":null,"is_sponsor":0},{"start_s":192.66,"end_s":196.22,"text":"that TSMC does, but semiconductor manufacturing","speaker":null,"is_sponsor":0},{"start_s":196.26,"end_s":202.42,"text":"is not about access to the equipment or even about the ability to build one chip.","speaker":null,"is_sponsor":0},{"start_s":202.42,"end_s":208.5,"text":"It's about the ability and the knowledge to build millions of chips and to do it economically.","speaker":null,"is_sponsor":0},{"start_s":208.5,"end_s":212.0,"text":"So the process control has to be darn near perfect.","speaker":null,"is_sponsor":0},{"start_s":212.0,"end_s":215.26,"text":"Too many defects and even if you could build it in-house,","speaker":null,"is_sponsor":0},{"start_s":215.26,"end_s":218.3,"text":"it might actually be cheaper to outsource the production","speaker":null,"is_sponsor":0},{"start_s":218.3,"end_s":223.9,"text":"even if it goes to a competitor. But how did TSMC become so dominant?","speaker":null,"is_sponsor":0},{"start_s":223.9,"end_s":228.54,"text":"They don't even have their own CPU brand. Well, that's actually a big part of it.","speaker":null,"is_sponsor":0},{"start_s":228.54,"end_s":232.7,"text":"By not competing with their customers, they became the ideal partner","speaker":null,"is_sponsor":0},{"start_s":232.7,"end_s":237.74,"text":"for fabless chip companies around the world, which gives them the volume of business they need","speaker":null,"is_sponsor":0},{"start_s":237.74,"end_s":241.34,"text":"to continually reinvest and even outcompete","speaker":null,"is_sponsor":0},{"start_s":241.34,"end_s":245.18,"text":"vertically integrated companies like Intel and AMD,","speaker":null,"is_sponsor":0},{"start_s":245.18,"end_s":250.66,"text":"who used to own their own fabs, but now are just one of TSMC's many customers.","speaker":null,"is_sponsor":0},{"start_s":250.66,"end_s":253.88,"text":"TSMC also bet very early on a technology","speaker":null,"is_sponsor":0},{"start_s":253.88,"end_s":257.52,"text":"that completely overshadowed the rest of the semiconductor industry.","speaker":null,"is_sponsor":0},{"start_s":257.52,"end_s":262.86,"text":"EUV lithography, a chip fabrication technology that is, let's put it mildly, pretty incredible.","speaker":null,"is_sponsor":0},{"start_s":264.2,"end_s":269.08,"text":"EUV lithography creates and uses extreme ultraviolet light,","speaker":null,"is_sponsor":0},{"start_s":269.08,"end_s":272.72,"text":"an incredibly short wavelength that doesn't naturally exist on Earth","speaker":null,"is_sponsor":0},{"start_s":272.72,"end_s":276.8,"text":"by evaporating drops of tin with high powered lasers","speaker":null,"is_sponsor":0},{"start_s":276.8,"end_s":280.0,"text":"and then forcing its electrons into higher energy states.","speaker":null,"is_sponsor":0},{"start_s":280.0,"end_s":285.84,"text":"That light passes through a photo mask, which you could think of as kind of like a high tech stencil","speaker":null,"is_sponsor":0},{"start_s":285.84,"end_s":290.08,"text":"with cutouts so fine that they're measured in nanometers.","speaker":null,"is_sponsor":0},{"start_s":290.08,"end_s":294.28,"text":"Those cutouts form a chip's pattern. This patterned light is passed","speaker":null,"is_sponsor":0},{"start_s":294.28,"end_s":297.96,"text":"between highly specialized mirrors called Bragg's reflectors","speaker":null,"is_sponsor":0},{"start_s":297.96,"end_s":301.12,"text":"that shrink the design down before finally etching","speaker":null,"is_sponsor":0},{"start_s":301.12,"end_s":305.2,"text":"or printing it onto our silicon wafer. All of this takes place hundreds","speaker":null,"is_sponsor":0},{"start_s":305.2,"end_s":308.56,"text":"or thousands of times per chip under complete vacuum","speaker":null,"is_sponsor":0},{"start_s":308.56,"end_s":312.56,"text":"because even any air in the chamber would absorb that EUV light.","speaker":null,"is_sponsor":0},{"start_s":312.56,"end_s":316.6,"text":"Now longer wavelengths like deep ultraviolet or DUV,","speaker":null,"is_sponsor":0},{"start_s":316.6,"end_s":321.64,"text":"they're much easier to work with, but they simply won't pass through cutouts that small,","speaker":null,"is_sponsor":0},{"start_s":321.64,"end_s":327.2,"text":"which makes it impossible to pack in all of the transistors that you need for the highest performance processors.","speaker":null,"is_sponsor":0},{"start_s":327.2,"end_s":330.44,"text":"That's the tech in a nutshell, but if you want some more detail,","speaker":null,"is_sponsor":0},{"start_s":330.44,"end_s":333.68,"text":"you can check out our video on EUV lithography equipment.","speaker":null,"is_sponsor":0},{"start_s":335.2,"end_s":339.36,"text":"TSMC's mastery of EUV has given them a dominant market share","speaker":null,"is_sponsor":0},{"start_s":339.36,"end_s":342.48,"text":"in the semiconductor manufacturing space overall","speaker":null,"is_sponsor":0},{"start_s":342.48,"end_s":348.44,"text":"with a portfolio that, maybe more importantly, includes basically every single cutting edge chip","speaker":null,"is_sponsor":0},{"start_s":348.44,"end_s":352.8,"text":"on the planet. And while their pricing is shrouded in secrecy,","speaker":null,"is_sponsor":0},{"start_s":352.8,"end_s":356.52,"text":"what little we do know is that it has only gone up over time","speaker":null,"is_sponsor":0},{"start_s":356.52,"end_s":360.24,"text":"and that's a trend that is widely expected to continue.","speaker":null,"is_sponsor":0},{"start_s":360.24,"end_s":366.28,"text":"So then, TSMC is the big bad? Solely responsible for our gaming GPUs becoming unaffordable?","speaker":null,"is_sponsor":0},{"start_s":366.28,"end_s":371.04,"text":"Haha, not even close. Let's talk about ASML.","speaker":null,"is_sponsor":0},{"start_s":372.04,"end_s":375.04,"text":"Every time TSMC, or anyone for that matter,","speaker":null,"is_sponsor":0},{"start_s":375.04,"end_s":382.48,"text":"wants an EUV lithography machine, they need to dig about $200 million","speaker":null,"is_sponsor":0},{"start_s":382.48,"end_s":386.2,"text":"out of their couch cushions and hand that over to ASML.","speaker":null,"is_sponsor":0},{"start_s":386.2,"end_s":391.12,"text":"Why ASML? Well, at risk of sounding a bit like a broken record here,","speaker":null,"is_sponsor":0},{"start_s":391.12,"end_s":394.12,"text":"because they're the only ones who make them.","speaker":null,"is_sponsor":0},{"start_s":394.12,"end_s":398.68,"text":"This time, the monopoly is a literal one, not a de facto one.","speaker":null,"is_sponsor":0},{"start_s":398.68,"end_s":402.0,"text":"And EUV equipment has made ASML so valuable","speaker":null,"is_sponsor":0},{"start_s":402.0,"end_s":406.24,"text":"that the mere suggestion that it could move its growth outside of its headquarters in the Netherlands","speaker":null,"is_sponsor":0},{"start_s":406.24,"end_s":412.76,"text":"for better infrastructure and talent acquisition prompted the Dutch government to spend $2.7 billion","speaker":null,"is_sponsor":0},{"start_s":412.76,"end_s":416.52,"text":"in infrastructure to keep them in the country.","speaker":null,"is_sponsor":0},{"start_s":416.52,"end_s":420.92,"text":"It's also given ASML extreme latitude when it comes to pricing.","speaker":null,"is_sponsor":0},{"start_s":420.92,"end_s":424.12,"text":"It's new high-NA EUV lithography fab,","speaker":null,"is_sponsor":0},{"start_s":424.12,"end_s":431.72,"text":"which is capable of producing an even smaller wavelength for even denser chips will apparently cost $400 million.","speaker":null,"is_sponsor":0},{"start_s":431.72,"end_s":435.76,"text":"Double the cost of the current low-NA EUV.","speaker":null,"is_sponsor":0},{"start_s":435.76,"end_s":440.32,"text":"Even TSMC is bulking at that price and has said, you know what?","speaker":null,"is_sponsor":0},{"start_s":440.32,"end_s":445.64,"text":"We'll grab a few for R&D purposes, but for now, I think we're gonna stick with the old systems","speaker":null,"is_sponsor":0},{"start_s":445.64,"end_s":450.12,"text":"for our 1.4 nanometer chips. With that said, it's not like they're gonna be able","speaker":null,"is_sponsor":0},{"start_s":450.12,"end_s":453.84,"text":"to put off buying the new hotness forever. And when it's time to pull the trigger,","speaker":null,"is_sponsor":0},{"start_s":453.84,"end_s":458.12,"text":"they won't be buying just one. Production facilities need many fabs,","speaker":null,"is_sponsor":0},{"start_s":458.12,"end_s":461.92,"text":"cost billions of dollars, and take years to ramp up production.","speaker":null,"is_sponsor":0},{"start_s":461.92,"end_s":468.0,"text":"So it actually kind of makes sense that the new chips cost more than the old ones.","speaker":null,"is_sponsor":0},{"start_s":468.0,"end_s":472.72,"text":"But that's not the only thing putting pressure on consumer pricing.","speaker":null,"is_sponsor":0},{"start_s":472.72,"end_s":475.88,"text":"The big thing is that at every level,","speaker":null,"is_sponsor":0},{"start_s":475.88,"end_s":482.8,"text":"there's a complete lack of competition to put pressure on these major players to keep prices low.","speaker":null,"is_sponsor":0},{"start_s":482.84,"end_s":486.44,"text":"And the worst part is that it didn't have to be this way.","speaker":null,"is_sponsor":0},{"start_s":486.44,"end_s":490.48,"text":"EUV was kind of a joint venture with Intel","speaker":null,"is_sponsor":0},{"start_s":490.48,"end_s":495.04,"text":"who invested in ASML for EV development back in 2012.","speaker":null,"is_sponsor":0},{"start_s":495.04,"end_s":500.88,"text":"But then, Team Blue grew skeptical of EUV, got cold feet, and divested from ASML","speaker":null,"is_sponsor":0},{"start_s":500.88,"end_s":503.88,"text":"when it started cutting assets back yet another","speaker":null,"is_sponsor":0},{"start_s":503.88,"end_s":507.0,"text":"in a series of cell phones during that time.","speaker":null,"is_sponsor":0},{"start_s":507.0,"end_s":509.68,"text":"And before that time, and more recently,","speaker":null,"is_sponsor":0},{"start_s":510.16,"end_s":515.44,"text":"Intel, sometimes you really are the smartest nincompoops in the entire industry.","speaker":null,"is_sponsor":0},{"start_s":515.44,"end_s":518.88,"text":"And the really bad news is unfortunately,","speaker":null,"is_sponsor":0},{"start_s":518.88,"end_s":523.08,"text":"things are likely to get worse before they get better, if they get better.","speaker":null,"is_sponsor":0},{"start_s":523.08,"end_s":527.26,"text":"The AI boom has gotten to the point where the very silicon wafers,","speaker":null,"is_sponsor":0},{"start_s":527.26,"end_s":532.24,"text":"like the big discs that they make chips out of, even those are in shortage.","speaker":null,"is_sponsor":0},{"start_s":532.24,"end_s":537.2,"text":"Why? If you guessed, because the production is controlled","speaker":null,"is_sponsor":0},{"start_s":537.2,"end_s":542.16,"text":"by a surprisingly small number of players who, like everyone else, feel they ought to be entitled","speaker":null,"is_sponsor":0},{"start_s":542.16,"end_s":546.2,"text":"to a bigger slice of that delicious AI money pie,","speaker":null,"is_sponsor":0},{"start_s":546.2,"end_s":552.12,"text":"you guessed right. Now, competition in cutting edge chips is coming,","speaker":null,"is_sponsor":0},{"start_s":552.12,"end_s":555.4,"text":"but not in a way that's guaranteed to benefit consumers,","speaker":null,"is_sponsor":0},{"start_s":555.4,"end_s":560.44,"text":"at least not consumers outside of China. Chinese fabs are ramping up new facilities","speaker":null,"is_sponsor":0},{"start_s":560.44,"end_s":565.24,"text":"that use creative approaches to, ostensibly, make competitive products","speaker":null,"is_sponsor":0},{"start_s":565.24,"end_s":569.32,"text":"without EUV technology. This matters because Western sanctions","speaker":null,"is_sponsor":0},{"start_s":569.32,"end_s":572.52,"text":"make it difficult for them to purchase ASML's cutting edge machines.","speaker":null,"is_sponsor":0},{"start_s":572.52,"end_s":576.76,"text":"The other thing is that even if their efforts pan out, building new fabs takes a long time,","speaker":null,"is_sponsor":0},{"start_s":576.76,"end_s":581.32,"text":"and there's no telling where the rest of the industry will be by the time they're pumping out chips at scale.","speaker":null,"is_sponsor":0},{"start_s":581.32,"end_s":588.2,"text":"Closer to home for many of our viewers, Intel is investing heavily in ASMC's new high NA EUV fabs,","speaker":null,"is_sponsor":0},{"start_s":588.64,"end_s":595.6,"text":"but any payoff from that is gonna be a long way away. And realistically, until a certain bubble pops,","speaker":null,"is_sponsor":0},{"start_s":596.48,"end_s":599.52,"text":"we're likely to be stuck with the skyrocketing prices","speaker":null,"is_sponsor":0},{"start_s":599.52,"end_s":603.28,"text":"that it has created. But hey, at least now you know","speaker":null,"is_sponsor":0},{"start_s":603.28,"end_s":609.32,"text":"where your headache's coming from. Maybe from too many segues to our sponsor.","speaker":null,"is_sponsor":0},{"start_s":609.32,"end_s":614.36,"text":"If you guys enjoyed this video, why not check out the time that we toured ASML's facility?","speaker":null,"is_sponsor":0},{"start_s":614.36,"end_s":618.76,"text":"Yes, thermonopoly, and yes, that kinda sucks right now,","speaker":null,"is_sponsor":0},{"start_s":618.76,"end_s":622.24,"text":"but that doesn't take anything away from how cool their stuff is.","speaker":null,"is_sponsor":0}],"full_text":"Computers keep getting more expensive. Why? Take a look at this. That right there, that's an NVIDIA GPU. Can we talk about NVIDIA, please? Cause I'm dying to talk about NVIDIA. NVIDIA has got the GPU market cornered and they're charging like it, but they're a fabless chip company. They're fabs, they don't exist. See, they get their chips from TSMC, Taiwan, Taiwan. Right there. They have the only fabs and they're charging like it. But guys, you think it stops there? No, we ain't anywhere near the top. See, ASML, they don't have the fabs, but they have the machines, the machines to make the fabs, to make the chips. And those machines, they're $200 million. There's no competition, no competition all the way to the top. What do you say about that? I mean, yeah, that's a problem. You're damn right it is. And what do you say about our sponsor? Here's the less manic and more thorough version. Over the last 20 years, NVIDIA's market share of discrete GPUs has climbed to 92%. Now that alone doesn't make them a literal monopoly, but what it does do is it allows them to act like one. I mean, think about it. AMD has fallen to a measly 7% and Intel only just broke the 1% barrier after three painful years in the market. So who's gonna stop them? Nobody. So thanks, at least in part, to their dominant position in the market, NVIDIA has dramatically ratcheted up their pricing over the years, pushing their flagship consumer GPUs from just $500 back in 2010 to $2,000 today with premium variants that cost much more than even that. I mean, it's no wonder then that consumers are resentful, even angry about it. Not angry enough to buy a radio, mind you, but angry enough to complain online. And I get it. We've become hooked on ever cheaper technology, even in the face of high inflation. But as it turns out, there's actually more of a reason for NVIDIA's pricing than just their desire for more money. See, neither AMD nor NVIDIA actually manufactured GPUs, the chips. They don't even own the fabrication plants that make them. Even Intel, who does own fabs, doesn't manufacture cutting edge GPUs in their fabs. In fact, all three of the players in the GPU space source from a single company called Taiwan Semiconductor Manufacturing Company, or TSMC. They also aren't a literal monopoly. Samsung and others have done their best to keep up over the years, but like NVIDIA, they have outcompeted their competition to the point where they are the only viable fabricator for the cutting edge chips that power the latest gaming GPUs and AI accelerators. That's not because nobody else could build them. Intel, for instance, has access to the very same equipment that TSMC does, but semiconductor manufacturing is not about access to the equipment or even about the ability to build one chip. It's about the ability and the knowledge to build millions of chips and to do it economically. So the process control has to be darn near perfect. Too many defects and even if you could build it in-house, it might actually be cheaper to outsource the production even if it goes to a competitor. But how did TSMC become so dominant? They don't even have their own CPU brand. Well, that's actually a big part of it. By not competing with their customers, they became the ideal partner for fabless chip companies around the world, which gives them the volume of business they need to continually reinvest and even outcompete vertically integrated companies like Intel and AMD, who used to own their own fabs, but now are just one of TSMC's many customers. TSMC also bet very early on a technology that completely overshadowed the rest of the semiconductor industry. EUV lithography, a chip fabrication technology that is, let's put it mildly, pretty incredible. EUV lithography creates and uses extreme ultraviolet light, an incredibly short wavelength that doesn't naturally exist on Earth by evaporating drops of tin with high powered lasers and then forcing its electrons into higher energy states. That light passes through a photo mask, which you could think of as kind of like a high tech stencil with cutouts so fine that they're measured in nanometers. Those cutouts form a chip's pattern. This patterned light is passed between highly specialized mirrors called Bragg's reflectors that shrink the design down before finally etching or printing it onto our silicon wafer. All of this takes place hundreds or thousands of times per chip under complete vacuum because even any air in the chamber would absorb that EUV light. Now longer wavelengths like deep ultraviolet or DUV, they're much easier to work with, but they simply won't pass through cutouts that small, which makes it impossible to pack in all of the transistors that you need for the highest performance processors. That's the tech in a nutshell, but if you want some more detail, you can check out our video on EUV lithography equipment. TSMC's mastery of EUV has given them a dominant market share in the semiconductor manufacturing space overall with a portfolio that, maybe more importantly, includes basically every single cutting edge chip on the planet. And while their pricing is shrouded in secrecy, what little we do know is that it has only gone up over time and that's a trend that is widely expected to continue. So then, TSMC is the big bad? Solely responsible for our gaming GPUs becoming unaffordable? Haha, not even close. Let's talk about ASML. Every time TSMC, or anyone for that matter, wants an EUV lithography machine, they need to dig about $200 million out of their couch cushions and hand that over to ASML. Why ASML? Well, at risk of sounding a bit like a broken record here, because they're the only ones who make them. This time, the monopoly is a literal one, not a de facto one. And EUV equipment has made ASML so valuable that the mere suggestion that it could move its growth outside of its headquarters in the Netherlands for better infrastructure and talent acquisition prompted the Dutch government to spend $2.7 billion in infrastructure to keep them in the country. It's also given ASML extreme latitude when it comes to pricing. It's new high-NA EUV lithography fab, which is capable of producing an even smaller wavelength for even denser chips will apparently cost $400 million. Double the cost of the current low-NA EUV. Even TSMC is bulking at that price and has said, you know what? We'll grab a few for R&D purposes, but for now, I think we're gonna stick with the old systems for our 1.4 nanometer chips. With that said, it's not like they're gonna be able to put off buying the new hotness forever. And when it's time to pull the trigger, they won't be buying just one. Production facilities need many fabs, cost billions of dollars, and take years to ramp up production. So it actually kind of makes sense that the new chips cost more than the old ones. But that's not the only thing putting pressure on consumer pricing. The big thing is that at every level, there's a complete lack of competition to put pressure on these major players to keep prices low. And the worst part is that it didn't have to be this way. EUV was kind of a joint venture with Intel who invested in ASML for EV development back in 2012. But then, Team Blue grew skeptical of EUV, got cold feet, and divested from ASML when it started cutting assets back yet another in a series of cell phones during that time. And before that time, and more recently, Intel, sometimes you really are the smartest nincompoops in the entire industry. And the really bad news is unfortunately, things are likely to get worse before they get better, if they get better. The AI boom has gotten to the point where the very silicon wafers, like the big discs that they make chips out of, even those are in shortage. Why? If you guessed, because the production is controlled by a surprisingly small number of players who, like everyone else, feel they ought to be entitled to a bigger slice of that delicious AI money pie, you guessed right. Now, competition in cutting edge chips is coming, but not in a way that's guaranteed to benefit consumers, at least not consumers outside of China. Chinese fabs are ramping up new facilities that use creative approaches to, ostensibly, make competitive products without EUV technology. This matters because Western sanctions make it difficult for them to purchase ASML's cutting edge machines. The other thing is that even if their efforts pan out, building new fabs takes a long time, and there's no telling where the rest of the industry will be by the time they're pumping out chips at scale. Closer to home for many of our viewers, Intel is investing heavily in ASMC's new high NA EUV fabs, but any payoff from that is gonna be a long way away. And realistically, until a certain bubble pops, we're likely to be stuck with the skyrocketing prices that it has created. But hey, at least now you know where your headache's coming from. Maybe from too many segues to our sponsor. If you guys enjoyed this video, why not check out the time that we toured ASML's facility? Yes, thermonopoly, and yes, that kinda sucks right now, but that doesn't take anything away from how cool their stuff is."}