German factory fire could worsen global chip shortage

ASML is the sole provider of the extreme ultraviolet lithography machines used by TSMC, Samsung and other chip makers

ASML Holding NV has shut part of its factory in Berlin after a fire earlier this week, sparking concerns around the already serious global shortage of semiconductors.

No-one was injured in the incident, but ASML said it is too early to tell how significant the damage was and whether it will have any impact on operations.

The company is now investigating the cause and consequences of the fire, intending to provide an update as soon as possible.

According to Bloomberg, the fire affected about 200 square meters out of a total 32,000 square meter site. The impacted area remains closed, while other areas of the site are still operating.

ASML is the sole provider of a vital technology used to manufacture computer chips. The Dutch firm is the world's largest supplier of photolithography systems and the only provider of extreme ultraviolet (EUV) lithography machines, used to etch circuits onto silicon wafers. ASML's EUV customers include TSMC, Samsung Electronics, SK Hynix and other chip makers, who in turn supply companies including Apple, IBM and Samsung.

ASML is currently operating at full capacity due to the global semiconductor shortage.

The Berlin factory, the former Berliner Glas, makes equipment including wafer tables, mirror blocks and reticle chucks. ASML acquired Berliner Glas, one of its former suppliers, in 2020.

"If ASML's shipments are cut by 10 per cent due to a fire at its Berlin factory, where key parts for its semiconductor lithography machines are made, that could temporarily reduce global supply of lithography tools by around 8.4 per cent, as ASML has 84 per cent market share in the tools," Masahiro Wakasugi, an analyst at Bloomberg Intelligence, wrote on Tuesday.

The Berlin factory fire comes as the world is experiencing an ongoing and severe shortage of computer chips. A variety of factors have contributed to the situation, including the global pandemic, extreme weather and a trade war.

The shortage has affected many industries, including smartphone and car makers.

Last year, most automobile firms - including Nissan, Ford, Honda, Jaguar Land Rover and Toyota - either slowed or temporarily halted production at some of their plants.

In May, IBM president Jim Whitehurst predicted that the shortage could last until 2023, announcing that the industry was "struggling" to match supply to the demand caused by the reopening of global markets.

European chipmakers Infineon and STMicroelectronics echoed Whitehurt's words, predicting production shortages continuing for another 18 months.