Lithography giant, "collapses" loudly.

Recently, Japanese optical giant Nikon issued its most disastrous loss warning in history - it is expected to incur a massive loss of 85 billion yen in the 2025 fiscal year, setting a record low for the company since its founding in 1917. Its core lithography business has suffered a total collapse, causing the former lithography dominant to fall into an unprecedented survival crisis. Citing multiple reports: in the past six months, Nikon's lithography machines only shipped 9 units, all of which were older models with lower technical content and a clear lag in technology generation. This means that this company, which was once deeply tied to Intel and AMD, setting industry standards, has completely lost its competitiveness in advanced process domains. Nikon has not only failed to capture the boom of AI computing power, but has also fallen into a financial quagmire due to a significant shrink in orders and a buildup of inventory. In stark contrast, in 2025, Dutch company ASML sold 327 units, with 48 units of high-end EUV lithography machines, occupying an absolute dominant position in the global high-end market. A turning point of an era. Nikon, which was once known as one of the "three giants of lithography" along with ASML and Canon, held a global lithography market share of about 40% in 2001, with almost every two lithography machines worldwide produced by Nikon. This company was once the object of admiration for chip giants, but its market share has now fallen to single digits, and its market competitiveness is approaching zero. From peak to trough, Nikon's downfall was not overnight. Its turning point in fate perfectly reflects the twists and turns of the global lithography market over the past thirty years, and also poses a cruel question to the industry: how should former champions act when the industry leader leaves them in the dust? When the technological path is locked by competitors, is there still a chance for those who come later to turn the tables? From peak to trough, Nikon's road to defeat The "golden age" of Nikon lithography machines To understand Nikon's downfall, one must go back to its glory days. Nikon's lithography business started in the 1970s, leveraging its core technology advantage in camera lenses to quickly enter the semiconductor lithography equipment market. At that time, the global semiconductor industry was rapidly rising, with chip processes gradually moving from microns to nanometers. As the most core and complex equipment in chip manufacturing, lithography equipment became the focus of major companies. Nikon rapidly established its position in the lithography machine market based on precise market judgment and leading optical technology, and exploded in the 1980s. At that time, Nikon's 193nm wavelength dry lithography machine, with its ultra-high resolution and stability, became the preferred equipment for chip manufacturers worldwide, dominating the market of the 193nm dry lithography era. Industry data shows that in the mid-1990s, Nikon's lithography machine market share worldwide once exceeded 50%, rivaling Canon, with the two companies accounting for over 90% of the global lithography machine market, forming a "Japanese twin giants" monopoly. During this period, Nikon's core competitiveness lay in its deep ties with top global chip companies. At that time, American chip giants like Intel and AMD were making full efforts to upgrade CPU processes, and Nikon's lithography machines, with their stable performance and leading technology, became the core suppliers for these companies. Nikon's lithography equipment customized for Intel perfectly matched CPU production requirements and helped Intel gain advantages in competition with AMD. It is said that from Intel, AMD, IBM to Texas Instruments, global chip giants spared no effort to obtain a Nikon lithography machine, even setting up on-site teams at Nikon's Silicon Valley branch, just to secure priority supply rights. There are even rumors that semiconductor bosses personally visited Nikon factories, prepaying full payment just to secure a debugging slot. This depth of integration also allowed Nikon to receive stable orders and generous profits, further solidifying its industry position. In addition to binding American giants, Nikon also had a strong customer base in Japan. Sony, Toshiba, Hitachi, and other Japanese semiconductor companies were all core customers of Nikon, and this advantage of "local synergy" enabled Nikon to soar in the global market. At its peak, Nikon's lithography machines were not only a benchmark of technology, but also setters of industry standards, with their lithography technology specifications adopted by most chip manufacturers worldwide. Under Nikon's leadership, the American pioneer in lithography, GCA, was forced into bankruptcy; at that time, ASML was still struggling in the European market, with a market share of less than 10% and was incomparable to Nikon. During that time, Nikon was flourishing, and its glory even surpassed that of ASML today. The lithography business became the group's core profit pillar, driving the development of other businesses such as cameras and telescopes together. Nikon also once became the pride of Japanese manufacturing and was seen as an example of a technology-led country. No one would have imagined that such a king standing at the top of the industry would fall into such a difficult situation within a short period of 20-30 years. Triple mistakes, step by step missing the wave of the times The turning point came in 2002. That year, Lin Benjian, a senior TSMC manager, knocked on Nikon's door. Faced with the bottleneck of the 193nm dry lithography machine at that time and the slow progress in the development of the next-generation 157nm light source, Lin Benjian proposed a revolutionary idea: to inject a layer of water between the lens and the wafer. By using the refractive index of water, the effective wavelength of the 193nm light source could be shortened to 134nm, bypassing many challenges of the 157nm route. This is the immersion lithography technology route that later changed the history of semiconductors. This was originally a lower-cost, better-performing shortcut, but it was almost unanimously opposed by all of Nikon's top executives. From the chairman to the technical leaders, no one even had the patience to listen carefully to Lin Benjian's explanation. Nikon's representatives questioned on the spot: "If the lens is contaminated with water, can your TSMC afford the loss? If bubbles lead to mass rejection, who will be responsible?" The deeper reason lay in the path dependence. At that time, Nikon had already invested over one billion dollars in 157nm dry lithography machine. Turning to the immersion route meant discarding all previous investments. According to the reports: Nikon not only rejected Lin Benjian, but even tried to use its industry prestige to suppress this idea. According to Lin Benjian's later recollection, senior Nikon executives called TSMC's Vice President of Research and Development Jiang Shangyi and said, "Please control your Lin Benjian and do not let him promote this idea that disrupts industry consensus everywhere, which will distract everyone and waste resources." After hitting a wall at Nikon, Lin Benjian flew to the Netherlands. At that time, ASML was still struggling for survival and urgently needed a breakthrough opportunity. ASML's technical soul, Martin van den Brink, went against all odds and bet all of ASML's resources on this crazy idea. In 2004, ASML collaborated with TSMC to launch the world's first immersion lithography machine ArFi, which swept the global market with higher accuracy and lower cost. In 2007, ASML's market share exceeded 60%, forming a crushing trend for the first time; after 2010, ASML's market share exceeded 70%, leaving Nikon and Canon far behind. Nikon's top-level lens, in the face of the new technological route, instantly paled. Nikon and Canon were forced to abandon the 157nm route and follow the immersion route, but it was already too late. In the immersion ArF lithography field, ASML, with its mature TWINSCAN dual wafer technology, has firmly grasped over 90% of the market share. This was a textbook-level technical misjudgment. Nikon did not lack the technical capability, but it was confined by its success experience, having a natural aversion to new technologies outside of its system. However, the failure of immersion lithography was just the beginning, and Nikon's true "Waterloo" was yet to come. Faced with the failure of the immersion lithography battle, Nikon pinned its hopes on the next generation technology: EUV (Extreme Ultraviolet Lithography). This technology, with a shorter wavelength (13.5nm) capable of engraving even smaller circuits on chips, was viewed as the key battle for Nikon to return to its peak. Ma Limin, then the technical head of Nikon's lithography machines, made ambitious plans: full self-research, full made in Japan. He attempted to replicate the era of precision manufacturing that conquered the world within the closed walls. At the same time, the Japanese government, which had already lost its chip dominance, also threw its full support behind Nikon, viewing it as a national battle. Led by the Ministry of Economy, Trade, and Industry, Japan built a large "industry-government-academia" united front, investing billions of yen in funding, joining industry chain companies such as Nikon, Canon, Tokyo Electronics, Shin-Etsu Chemical, and others to collaborate. This was a typical Japanese charge: consolidating resources with a single goal. However, by this time, the world had changed. At the time when Nikon was fervently pursuing the EUV project, ASML received its first significant strategic investment from Intel, Samsung, and TSMC. The three major customers jointly invested to help ASML accelerate the development of EUV and set up their own EUV alliance. This alliance not only bound the world's top chip manufacturers but also gathered the strongest global industry chain companies such as German Zeiss (lens) and American Cymer (light source). This type of "vertical cooperation" model enabled ASML to focus on system integration and core technology breakthroughs, rather than being spread too thin. This was also one of the deep underlying reasons for Nikon's failure. For a long time, Japanese companies believed in the mode of full self-research production, choosing to highly self-research core components (lenses, light sources, precision machinery). This "vertical integration" could guarantee ultimate quality in an era of slow technological iteration, but when EUV technology, which required global cooperation, arrived with research costs exceeding tens of billions of dollars and involving 100,000 components, the "human industrial peak" was reached. Nikon discovered that it could no longer afford the admission ticket. ASML's choice of "binding interests, sharing risks" led it down a completely different path. What's more, the US, which had suffered major losses in the past in chips from Japan, excluding Nikon, Canon, and other Japanese companies from the EUV technology alliance, cutting off their access to top American technology. At this point, Nikon's "full self-research" turned into "in-house fabrication." By 2018, Nikon's estimated investment in the EUV project was over 100 billion yen, the largest single technology bet in the company's history. However, this investment only brought about a prototype machine that was not commercially viable. While ASML's EUV lithography machine was already rapidly iterating on the TSMC production line, Nikon's prototype machine was still gathering dust in the laboratory. When TSMC announced mass production of the 7nm process in 2018, ASML had already monopolized over 90% of the high-end lithography machine orders globally, forming a technological hegemony with no substitutes. Eventually, Nikon had to announce the termination of the commercial development of the EUV lithography machine. In addition to a series of technological misjudgments, Nikon also made fatal mistakes in its market strategy. It placed excessive bets on a single giant, Intel. In 2024, Intel significantly cut capital expenditures due to massive losses, directly leading to a sharp decline in Nikon's orders. At the same time, Nikon failed to diversify to core chip manufacturers like TSMC and Samsung in a timely manner, and the order gap could not be filled. The external policy environment further exacerbated the situation. Over the past five years, China was once Nikon's largest "lifeline". With the expansion of mainland wafer fab capacity, Nikon's precision equipment sales in China once accounted for over 40%. However, when the US implemented semiconductor equipment export controls to China, Nikon chose to follow the US's lead and missed out on partnership opportunities. This led to delayed equipment delivery, cost increases, and Chinese customers turning to domestic alternatives, further squeezing Nikon's survival space. The Nikkei Asian Review has pointed out that China has become the third country globally with complete lithography machine manufacturing capability, and Nikon has missed its opportunity to carve a piece of the high-priced old equipment market. In September 2025, Nikon closed its Yokohama factory after 58 years of operation, marking further shrinkage of its lithography machine business. And 70-year-old Ma Limin, who was in charge of Nikon lithography machine technology, is about to step down. From being the technical leader to the peak of power, this Nikon veteran once tried to revive the past glory by his own efforts, but ultimately fell short. ASML: From "defense" to "offense" While Nikon was falling, ASML has grown from a follower to an absolute ruler in the global lithography machine market. In the high-end lithography field, ASML's dominance is unrivaled. Especially in the EUV lithography market, ASML is the sole giant, controlling the "throat" of advanced process chip manufacturing for 7nm and below - whether it be TSMC, Samsung, or Intel, all rely on ASML's EUV lithography machines. According to statistics, ASML's market share in the EUV lithography machine market has reached 100%, and its share in the high-end DUV lithography machine market is also over 90%, forming a solid technological barrier and market moat. This has become its "cash cow" and monopoly foundation. However, ASML did not stop there. With Moore's Law approaching physical limits, relying solely on transistor miniaturization to improve chip performance has become increasingly costly and difficult. The industry has turned its focus to another direction: advanced packaging. AS chip processes approach physical limits, advanced packaging technology has become an essential path to improve chip performance. This is exactly the core technology that Nvidia's AI chips such as H100/B200 depend on - TSMC's CoWoS, InFO, and other packaging technologies have become key for Nvidia chips to shine. ASML realized that merely controlling the "front-end manufacturing" might no longer be enough to dominate the future. If it could have an advantage in advanced packaging equipment, it could extend from "front-end manufacturing" to "back-end packaging," control the entire chip manufacturing process, expand its market share further, and consolidate its industry hegemony. Therefore, ASML turned to "offense" and began laying the groundwork for the advanced packaging equipment field. ASML's powerful moves suggest that the competition between equipment giants has shifted from a single process breakthrough to system-level technology integration. Whoever can provide a more complete solution to help customers reduce system complexity, shorten time to market, and has the advantage of a full-flow process, can take the lead in the next round of competition. Additionally, it is worth noting that geopolitical factors will profoundly affect the future of the semiconductor equipment market. In recent years, the global semiconductor industry has seen increasingly intense geopolitical games, with export controls, technology blockades, and other measures that not only affect the development of companies but also change the industry's supply chain structure. In the future, companies must consider geopolitical factors when developing strategies, build diversified supply chains, and reduce operational risks. In conclusion Nikon's downfall is more like a warning bell, reminding all technology companies: in this cruel industry driven by both capital and technology, there are no eternal kings, only those who adapt to the times. Nikon did not lack technology nor funds. It failed in predicting new trends, being trapped by the inertia of its closed system, and being slow to adjust its customer structure. When the technological route changed, the company's past assets could turn into liabilities in an instant. ASML's success today stems from its bold embrace of immersion technology twenty years ago, from its strategic vision of building a global open ecosystem. However, history has proven that hegemony is often a precursor to decline. As ASML expands from the lithography machine leader to a "whole industry chain integrator," it also faces new risks: the further rise in technological complexity, the uncertainty of geopolitical politics, and the threat of disruptive technologies. According to the China Industrial Research Institute, the global lithography machine market is expected to reach $39.2 billion in 2026. In this huge and rapidly expanding race, the rules have been rewritten, with technological paradigm shifts, business model innovations, and ecosystem competitions that could overturn existing patterns at any moment. The only certainty is that the competition in the semiconductor industry will never stop. Only those companies that remain open, embrace change, and always maintain a sense of awe for the changing times will be able to survive in the next technological wave. Nikon's defeat is a requiem for an old era; while ASML's expansion and Canon's exploration are the prelude to a new battle. The story of lithography machines is far from over; it has just turned to a more complex and brutal page.