Samsung completes ASML's EUV investment program

27 Aug 2012

Korean semiconductor and electronics giant buys 3% stake in the Dutch lithography company, joining Intel and TSMC.

Samsung has followed its fellow chipmakers Intel and Taiwan Semiconductor Manufacturing Company (TSMC) by joining ASML’s “customer co-investment program”, which is set to plough hundreds of millions of dollars into the development of extreme ultraviolet (EUV) lithography.

The giant Korean company, also the world’s largest manufacturer of memory chips, has committed to buy a 3% stake in ASML for €503 million, as well as provide a €276 million contribution to support research and development of future EUV systems needed to maintain the rule of Moore’s law.

“This completes the [customer co-investment] program, as the target for aggregate research and development funding commitments of €1.38 billion has now been met,” announced ASML in a statement.

ASML says that it is already on track to deliver the first production-ready EUV tools to customers beginning early next year; this additional cash will be used to develop future, higher-throughput versions of the technology, as well as support the move to chip production on larger silicon wafers measuring 450 mm in diameter. The current standard is 300 mm.

Once the deal is completed, Intel, TSMC and Samsung will together own a 23% stake in ASML – in exchange for an aggregate €3.85 billion in cash. Despite the massive investment, ASML says that the shares that will be issued to the companies will be non-voting “except in exceptional circumstances”.

Model for other photonics technology development?
Intel, the world’s largest silicon chip manufacturer, was first to join ASML’s investment program in early July, and is set to take the largest individual stake in the lithography specialist with a 15% equity share. TSMC, the world’s largest semiconductor foundry – and a company with business interests in both photovoltaics and LED production – signed up to take a 5% stake on August 5.

“The object of the program is to secure and accelerate key lithography technologies,” said ASML’s CEO Eric Meurice when announcing TSMC’s participation, pointing out once again that the fruits of the research and development would become available to all, and not be restricted to the investing partners.

“These technologies will benefit the entire industry, and will enable smarter, more powerful, more energy-efficient and cheaper electronic devices for consumers,” the company added in its announcement of Samsung’s participation.

The approach being taken by ASML to guarantee an injection of more than one billion euros of cash into the development of both EUV and 450 mm wafer lithography over five years has been well-received by analysts and financial markets – the Dutch company’s stock has traded at close to record highs ever since the July 9 announcement with Intel.

And at a time when central government funding is increasingly scarce, the somewhat radical investment model could perhaps serve as a template for future investment in other photonics-related technology areas.

Authors of the recently published National Academy of Sciences (NAS) report "Optics and Photonics: Essential Technologies for our Nation" highlighted “beyond EUV” light sources for industrial applications as one key area for future investment, and also noted the concerns raised by the likes of Google, Facebook and Apple regards the ability of data center technologies to keep pace with internet traffic demand beyond 2014.

Given the cash balances held by those three companies, they would certainly be in a position to back the development of future photonics technologies for data centers in a similar way, should they wish to do so.