Beyond the Chip Shortage: Why ASML’s Courtship of India is a Strategic Masterstroke 

ASML, the Dutch maker of critical chip-making machines, is actively seeking partnership with India as Prime Minister Modi pushes for a domestic semiconductor industry. This strategy is pragmatic, focusing first on producing less-advanced “mature-node” chips that power everyday electronics and automobiles, rather than competing in the cutting-edge market. This approach allows India to build a foundational ecosystem, achieve quicker commercial wins, and address persistent global supply chain shortages.

For ASML, this is a long-term bet, positioning it as a key partner from the ground up and diversifying its own markets amid global trade tensions. While major international chipmakers remain cautious, local demand from tech firms like OpenAI provides a ready market. This collaboration represents a significant step in India’s journey toward technological self-reliance and a more balanced global supply chain.

Beyond the Chip Shortage: Why ASML’s Courtship of India is a Strategic Masterstroke 

While the world has been fixated on the geopolitical chess game over advanced semiconductors, a quieter, more strategic move is unfolding in New Delhi. ASML Holding NV, the Dutch company that owns a veritable monopoly on the machines required to make the world’s most advanced chips, is publicly pitching its services to India. This isn’t just a sales call; it’s a recognition of a fundamental shift in the global tech landscape and a bet on a long-term player. 

Prime Minister Narendra Modi’s ambition to see “Made-in-India” chips by the end of 2025 is more than national pride. It’s a critical step toward technological sovereignty for the world’s fifth-largest economy. For decades, nations have understood the strategic vulnerability of relying on a concentrated, geopolitically tense supply chain for semiconductors—the brains behind everything from smartphones and medical equipment to military hardware and AI. 

India’s entry, therefore, is a welcome diversification. But it’s also pragmatic. As ASML’s new CEO, Christophe Fouquet, noted at the Semicon India summit, the initial goal isn’t to compete with the 3-nanometer chips powering the latest iPhones. India is expected to focus on the unsung heroes of the semiconductor world: mature-node chips. 

The Unsung Value of “Legacy” Chips 

While cutting-edge chips grab headlines, the global economy runs on millions of simpler, less advanced chips. They control power steering in our cars, manage the temperature in our refrigerators, and operate the displays on our washing machines. The recent supply chain crisis was a painful lesson in how dependent we are on these ubiquitous components. 

This is where India’s strategy is shrewd. By targeting this established, high-demand market first, India can: 

• Build a foundation: Establish a functional semiconductor ecosystem—from design and fabrication to packaging and testing—without the immense technical and financial hurdles of leading-edge manufacturing. 

• Achieve quick wins: Generating revenue and proving capability with mature nodes builds confidence for domestic and international investors. 

• Address a real need: The global shortage of these chips is still a concern for auto, industrial, and consumer electronics makers. India can position itself as a reliable, diversified supplier. 

ASML’s Calculated Play 

For ASML, this is a forward-looking investment. The company’s extreme ultraviolet (EUV) lithography machines, which cost hundreds of millions of dollars each, are the only way to make the most advanced chips. However, its deep ultraviolet (DUV) lithography systems are the workhorses for creating the mature-node chips India is targeting. 

By engaging now, ASML isn’t just selling machines; it’s embedding itself as a foundational partner in India’s chip story. This “collaboration and knowledge exchange” Fouquet mentioned is key. It builds relationships with the future TSMCs and Samsungs of India, ensuring that as the country’s capabilities grow, its reliance on ASML’s technology deepens. 

This move also helps ASML diversify its own market amid turbulent US-China trade restrictions. With China’s access to advanced equipment constrained, cultivating new growth markets like India is a strategic necessity. 

The Road Ahead: Realistic Optimism 

The path is not without challenges. Building a credible fab is a multi-billion dollar endeavor with long lead times. While the first indigenously produced chips may come from a pilot line this year, scaling to commercial volume is a different beast. The world’s largest chipmakers are watching but have yet to commit significant investment, waiting for proof of stability, infrastructure, and a skilled talent pool. 

The interest from companies like OpenAI in building massive data centers in India, however, signals a powerful demand driver right on its doorstep. A local chip supply, even for mature nodes, could be a compelling advantage. 

The takeaway is clear: India is playing a long game. It’s starting with the achievable to build toward the ambitious. And ASML, the master enabler of the chip industry, is placing its bet early, recognizing that every global powerhouse started somewhere. This partnership isn’t about the chips of tomorrow, but about building the foundation for the ecosystem of the day after.