You are correct. The discussion about ASML is relevant in that state of the art chips cannot be produced without one of their TwinScan lithography tools. ASML is the only company that can build tools with 7nm and below capability.
In the context of the EU developing the ability to fabricate state-of-the-art chips, ASML would sell them the TwinScan tools they needed, which are just one species of about 40 that are used for chip fabrication.
ASML would also sell those tools without prodding by the EU. ASML would dearly love to sell them to SMIC and other Chinese foundry too, if the US would let them.
Lithography machines are a functioning market that is interfered with for geo-strategic reasons.
If ASML is the only company that can do what they do and anyone else would need decades to catch up, how are they not the most profitable company in the world?
All of the world's most profitable companies depend dearly on chips. If they are literally the only company that can provide this critical part of the chip production, why aren't they taking a larger portion of the profit?
At some point their customers will stop worrying about using 7nm and go back to double-digit nanometres. CPU tech from the 2000s is adequate for most workloads, let alone stuff from 2010.
I'm sure there is a lot of stuff where 7nm is necessary to get certain outcomes, but it is a small market compared to what could be reasonably done with older process technologies.
In the context of the EU developing the ability to fabricate state-of-the-art chips, ASML would sell them the TwinScan tools they needed, which are just one species of about 40 that are used for chip fabrication.