HIGHLIGHTS: Christophe Fouquet - CEO of ASML

0:01Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi everyone, I'm Nikolaj Tangen, the CEO of the Norwegian Soren Wealth Fund. And today we are honored to welcome Christophe Fouke, the CEO of ASML. Now, ASML, it's the most important company many of you have never heard about. It produces the equipment that actually makes the computer chips. And it's basically the progress here which drives and decides the speed of the progress in health, electrical vehicles, communication, weapons, pretty much everything we do. So I consider Christoph one of the most important people in the world just now.

0:43Warm welcome. Thank you very much, Nikolai. It's a great pleasure to be with you today. I'm very much looking forward to a great discussion about this great industry. And we are very proud shareholders as well. We own 2.6 % of the company, equivalent to$7 billion. So it's very important for us. What do you actually produce? Well, what we produce in ISML are lithography systems. Lithography system basically is a very important system in the entire semiconductor process because this is a system that is going to print the image of the electronic circuit you want to get on a chip. So if you want printing whatever our customer wants to realize.

1:31So this is what we have been doing for the last 40 years, pretty much. Now, you are the only EUV lithography printer in the world. Now, in one minute, what is EUV? So, EUV refers to the light, the type of light we are using basically on those lithography machines. EUV means extra-edritrivolate. And this is a very, very short wavelength. We're talking about 13.5 nanometers. So, you look at the very, very small wavelengths. And in lithography, the smaller the wavelengths, the smaller the feature you can print. So EUV is the light. And the reason why a lot of people talk about EUV is because being able to create that light in sufficient amount to industrialize a tool with it has been a challenge of many, many years.

2:23You think you can increase complexity by 16 times every two years for the next 20 years? Well, this is what our AI people want, right? This is what the AI company wants. Now, the problem with that today is that if we were to go on this path, cost is an issue. And as you know, of course, energy consumption is an issue. So that demand has to be, I would say, fulfilled through major innovation in our industry, major innovation in logic. you know, again, Intel, TSMC, Samsung in memory. So you hear a lot about high bandwidth memory today, but also major innovation in our domain in lithography to continue to basically enable our customer to get that type of density.

3:15This is why, you know, you talked about our latest equipment before, but this is why we continue basically to innovate and bring basically the ability to get more and more transistor per unit area with better lithography machine. Changing tacks a bit, the geopolitical tensions that we have now between the US and China, what are the implications for you? Well, I think there are many, many implications because we went from a world where we were looking at a very, very open, collaborative world, right? I think the idea a few years ago was that, you know, we are going to do business everywhere. Everyone can work with everyone.

4:01And this has supported, I would say, the development of our industry quite significantly because every part became important. And we go from that view of the world to a view of the world where people more and more are looking at potentially decoupling things. and this changed of course everything because the way this industry was designed the way this industry has developed was based on the previous rules it was based on a completely open market it was based on the idea that you can basically use the revenue of more advanced products sorry the revenue of less advanced product that you have developed a few years before to fund the development of more advanced one so you had this balance which which i think is a bit being put in question so this require quite some some adjustment and i think we see two main risk on that.

5:08The main one is cost, you know, because if you get less revenue, you have less ability to do R &D, except if your cost increase. If you are limited in geographic area to produce things, cost could also go up. I think we're all very much aware that, for example, that when it comes to build, to manufacture your chips, the US, Europe are a lot more expensive than Asia. that also mostly slowed down a bit the innovation because again we used to have this very open ecosystem and this may be also a question so this makes things of course a bit more difficult or potentially a lot more difficult depending on how far you push basically the decoupling model so it's very fundamental Of the 50 largest technology companies in the world, only four are in Europe.

6:11So a naive question here. Why is that? Well, I think it's a very tough question in Europe. And if you knew the amount of time we spent having this exact same discussion. But I already touched on some of that. I talked about flexibility. I talked about cost. This is very important. I think access to capital is also very, very critical. You need to be able to invest. I think today, access to capital is a lot stronger in the US than it is in Europe. I think you know that very well, right? But a lot even of the capital usually being used to invest in Europe come from the US. So that's something people underestimate that's very important.

7:00Access to resources, to electricity, power, the price of the power, all of that are very, very important things. And you see a lot of those debates happening today in Europe. This is a discussion we're having, of course, with our government. You know, we made the decision to extend ourselves, you know, in the Netherlands because that makes sense for us. But we only can do that if we have the infrastructure, if we have the energy, if we have all those things. So the reason why you have less company in Europe than maybe other places of the world is because those things today are just more difficult.

7:38And, you know, Mario Draghi just published a report in Europe, which I think described that very, very nicely. And now what's important is to have the political will to reinvest in the future and basically create opportunity. I think that's very, very important. So, Christoph, if you were to go a bit deep, why do you work so hard? Is it a particular person you want to prove wrong? or does it come back to some type of inferiority complex that we all had when we were younger? Or what do you think? There is a time in your career. I think you have to be honest. I think the first part of your career is about proving yourself.

8:19I think I truly believe that. And I truly believe that because I still remember the day I felt I was done with that. There was a day I say, okay, I think I've proven what I wanted to prove to myself, maybe to my friends, my family. And then you look forward and say, okay, what's next? And I think what's next after that is, okay, what can I do to help? And, you know, where is the place where I can do something that matters, that can really help? And, you know, when I became the CEO of XML, when people asked me to become the CEO of XML, this was one of the two questions I really had, the the question was really, if I'm going to do that, can I really bring something?

9:08This company is great. You know, with Peter Martin before, they have done something extraordinary, even intimidating for most people. So if I do it, am I going to do something that could be, you know, really good? And it was very important for me to be able to answer yes to that question in all honesty, you know, not very fundamentally. I think it's for me that when you don't have to prove anything anymore, I think it's very liberating. So I wish everyone that this come as early as possible in their career. And then you have more space basically to really think about what can I do to be useful or what can I do to help?