US tariffs on critical tools will drive up semiconductor costs: ASML CEO

The United States would need to consider how tariffs on critical tools for semiconductor manufacturing would drive up cost of semiconductors, ASML CEO Christophe Fouquet told ET on Tuesday.

Tariffs implemented by the Donald Trump regime have had some impact on the world's leading supplier for the semiconductor industry, he said at the Semicon India summit.

The Netherlands based company designs and manufactures the highly complex lithography machines that are essential for producing microchips. "The industry needs us. That's true even for the US. If it wants to develop more semiconductor manufacturing, they will need ASML systems, and having tariff on those tool will just increase the cost of manufacturing in the US. Tariffs are not always good for all products," he said.


With regards to shifting geopolitics, Fouquet said the semiconductor industry has been built in an open collaboration model where different part of the world were very good at different things. "That's still the best case scenario. The more we collaborate and the less barrier, the better it is for everyone in this industry. Going from AI, all the way to material supplier," he said.

Coming to India

ASML likes to be where its customers are, and may initiate an India play as and when semiconductor units continue to come up in India. For ASML to set up a manufacturing facility, Fouquet clarified that it requires a deeper understanding of the local ecosystem, and critically, the presence of major customers and significant progress in the overall semiconductor manufacturing ecosystem here.

India would need to establish the entire ecosystem, and focus on mainstream semiconductors rather than advanced semiconductors, he said. "China is interested in mainstream semiconductor because it needs those chips to create their electronics. Meanwhile, the US is extremely eager to go into advanced semiconductor since 80 percent of customers of this are in the US," he stressed.

This separation in the market, ensures different regions specialize in different types of semiconductors.

Fouquet said the gradual progression to manufacturing advanced semiconductors may take India 10-15 years. "Semiconductors are a long journey. If you start with the idea that in 2 years you will have everything then you fail because it takes a lot more time, he said.