Huawei's Patent Bid For EUV Doesn't Threaten ASML

Huawei recently submitted a patent application in China for extreme ultraviolet (EUV) technology, which is needed to develop the equipment that manufactures ultra-thin chips, which are practically a monopoly of the Dutch company ASML, Nicholas Rossolillo wrote for Motley Fool.

Photo Insert: Huawei has merely filed an application for a patent on EUV lithography equipment in China.

ASML has a huge lead in EUV machines used in producing the most advanced chips and supplies all existing chip fabricators worldwide.

Moreover, it has not supplied Chinese companies with the EUV equipment they need, forcing being to ramp up work in developing its own EUV technology. Huawei may or may not succeed in its EUV ambitions, but either way, ASML will be fine.

After a strong rally from multiyear lows in early October, shares of leading chip equipment maker ASML are falling once again.

While tech stocks have been selling off in general in the final days of 2022, ASML shareholders have extra reason for worry: Chinese tech giant Huawei has sought a patent for advanced chipmaking equipment. Motley Fool says ASML should not be threatened by this and recommends that investors buy ASML shares.

Huawei has merely filed an application for a patent on EUV lithography equipment in China. Decades of research and a handful of key acquisitions have put ASML many years in the lead when it comes to EUV technology know-how.

As critical as EUV has become, it's mind-bogglingly complex equipment to develop -- let alone to manufacture and operate.

Only a handful of companies make use of ASML's EUV setups, including the world's largest chip fabrication company, Taiwan Semiconductor Manufacturing Co. (TSMC), South Korea's Samsung and SK Hynix, Micron Technology, and Intel.

Moreover, thousands of parts needed for the EUV equipment are manufactured only in the US, which bans their sale to China.

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