Core Insights - The article discusses a group of top venture capitalists (VCs) from the West who visited China to assess the competitive landscape in clean technology and manufacturing, ultimately leading to a pessimistic outlook on investment opportunities in certain sectors [5][20]. Group 1: Observations from the Visit - The VCs experienced a "cognitive tsunami" as they witnessed the scale and speed of Chinese manufacturing, particularly at CATL, which dominates the global battery market with nearly 40% share [8][10]. - At CATL, the VCs were struck by the level of automation and efficiency, with 12 production lines operating with minimal human intervention, showcasing a system that is difficult to replicate [9][11]. - The visit to Shanghai's Marvel-Tech highlighted China's ability to rapidly innovate and adapt, with a robust supply chain that allows for quick prototyping and low costs, contrasting sharply with the longer timelines and higher costs in Europe [15][16]. Group 2: Industry Implications - The VCs concluded that the battery manufacturing sector and its supply chain are no longer viable for Western investment due to China's cost advantages, with battery costs in China at $60 per kWh compared to $120 in the West [21]. - The solar and wind energy sectors are similarly dominated by Chinese firms, with companies like GCL-Poly leading in next-generation technologies like perovskite solar cells, while Western firms struggle to maintain profitability [23]. - The production of key equipment for green hydrogen, such as electrolyzers, is also being outpaced by Chinese manufacturers, who benefit from significant subsidies and competitive pricing [26]. Group 3: Strategic Shifts - The VCs recognized a need to shift focus from direct competition in manufacturing to areas where the West holds advantages, such as software and innovative business models [29][31]. - A new paradigm is emerging, encapsulated in the phrase "Western Software, Eastern Hardware," suggesting a collaborative approach where Western capital and innovation can leverage Chinese manufacturing capabilities [27][29]. - This shift is prompting some VCs to pause investments in European battery startups and instead create funds focused on Sino-European technological cooperation [31]. Group 4: Future Considerations - The insights gained from the trip emphasize the importance of recognizing and adapting to the systemic efficiencies of China's industrial model, which prioritizes scale and cost over immediate profitability [26][35]. - The article concludes with a call for humility and collaboration in the face of a rapidly evolving global economic landscape, where traditional competitive strategies may no longer suffice [35].

Core Insights - The article focuses on the rise of ASML, a global leader in photolithography machines, which are essential for chip manufacturing, capturing over 80% of the market share and monopolizing advanced EUV technology [4][6][10]. Group 1: Photolithography Technology - Photolithography is described as the "heart" of chip manufacturing, with its precision directly impacting chip performance. The evolution from g-line to EUV technology has doubled chip integration with each advancement [6][8]. - ASML's journey is characterized as a "chasing light" story, continuously pushing the limits of light wavelength to create smaller, faster, and more powerful chips [6][10]. Group 2: ASML's Formation and Challenges - ASML originated from Philips' photolithography department, which was initially undervalued. In 1984, ASML was established with a mere $2.1 million in capital and fewer than 30 employees [6][8]. - The company faced severe challenges at its inception, including a lack of orders and near bankruptcy, which fostered a resilient and determined culture [7][10]. Group 3: Technological Breakthroughs - ASML's rise is marked by significant technological achievements, such as the development of the PAS 5500, which outperformed Nikon's machines in the 1990s [8][9]. - The ambitious EUV project required over €10 billion in investment and a decade of development, culminating in the production of the first EUV machine in 2018, enabling chips below 7nm [9][10]. Group 4: Business Model Innovation - ASML's success is attributed to its unique business model, emphasizing deep collaboration with suppliers and customers, such as the partnership with Zeiss for optical technology [10][11]. - The company shares risks with clients like Intel and TSMC, who invested in ASML during challenging times, creating a closed-loop of technology, funding, and market access [10][11]. Group 5: Talent and Culture - ASML's core strength lies in its people, fostering a culture that encourages questioning authority and tolerating failure, which attracts top engineering talent [11][13]. - The company promotes a mindset of viewing failures as valuable data, which aids in continuous improvement and innovation [20][25]. Group 6: Broader Implications - ASML's success is framed within the context of global technological competition, representing a significant achievement for European technology and impacting the advancement of digital civilization [17][19]. - The article emphasizes that the competition in photolithography is not just between machines but also between nations and eras, highlighting ASML's role in shaping the future of technology [17][19].