Intel to Take Stake in ASML
Chip giant hopes to accelerate the development of 450mm fabs and extreme ultraviolet (EUV) lithography with $4.1 billion deal.By Mark LaPedus, Contributing Editor
Seeking to accelerate the development of 450mm fabs and extreme ultraviolet (EUV) lithography, Intel Corp. has entered into a series of agreements with ASML Holding N.V. in a combined deal worth up to $4.1 billion. A s part of the deal, Intel will initially purchase 10% of pre-transaction issued shares of ASML for Euro$1.7 billion (approximately US$2.1 billion). Intel will commit to purchase an additional 5 percent of post-transaction issued shares as part of ASML’s program to enable minority investments of up to a 25 percent equity stake. What’s more, ASML has established a program to enable minority equity investments in the company. In fact, ASML is in talks with Samsung Electronics and TSMC.
In addition, Intel will commit €829 million (approximately $1.0 billion) to ASML’s research and development programs to help accelerate deployment of new technologies for 450mm wafers and EUV lithography by as much as two years. Officials from ASML said the Dutch equipment giant will develop EUV tools on both 300mm and 450mm platforms.
The total R&D funding and equity investment agreements could total €3.3 billion (approximately $4.1 billion). Not to be outdone, ASML has established a program to enable minority equity investments in the company. The objective of the program is to accelerate ASML’s EUV and 450mm efforts. ASML may issue up to an aggregate 25% minority equity stake to customers. Intel is the first participant in the customer co-investment program, and has committed to acquire up to a 15% equity ownership interest.
C.J. Muse, an analyst with Barclays Capital, said: ”ASML emphasized that while the negotiations with Intel have been going on for several years, the company also brought TSMC and Samsung in on the negotiations this past January. Both TSMC and Samsung have ~45 days to make a 5% investment each on the same terms as Intel, though we expect announcements sooner than that. In fact, we believe TSMC is on the cusp of accepting the terms, while Samsung is more likely to make R&D co-investments though without any equity ownership.”
Coincidentally, the news broke during a presentation from Mark Bohr, senior fellow and Intel’s director of process architecture and integration. Speaking at the annual Semicon West trade show in San Francisco on Monday (July 9), Bohr did not elaborate on the specifics on the ASML-Intel deal. But he was quick to point out that 450mm and EUV are critical: Clearly, it will enable chip makers to remain on Moore’s Law.
The move also helps clear a major stumbling block on two fronts: 450mm and EUV. For some time, Intel, TSMC, Samsung and others have been pushing for the development of 450mm fabs. The companies, along with GlobalFoundries, IBM and CNSE, recently formed a 450mm consortium in Albany, New York. The Global 450 Consortium or G450C hopes to have a demonstration line targeted for 14nm design rules in early 2013.
But for some time, the equipment makers balked on 450mm, because of the huge R&D dollars required and uncertain return-on-investment. More recently, however, the equipment vendors have jumped on the bandwagon amid the formation of the 450mm consortium.
The exception to the rule in 450mm was ASML. ASML has been pre-occupied with the development of its EUV tool and put 450mm on the back burner. But without ASML, the 450mm market was stalled; the Dutch equipment maker is the leading supplier of lithography and its tools will be required for the 450mm era.
The C450C group will initially use imprint technology for test wafer patterning. In the 450mm era, chip makers may initially use conventional 193nm immersion scanners in production. Over time, though, the industry will require EUV on 450mm wafers.
However, EUV has been delayed for years, due to the lack of power sources and other issues. ASML has shipped its ”pre-production” EUV tools to several vendors. By year’s end, ASML is supposed to ship a full-blown production EUV tool, with an overall throughput of 69 wafers an hour. Still to be seen, however, is if ASML will keep its promises. The stumbling block is Cymer Inc., which is delayed in its development of the critical EUV source.
A critically important aspect of the ASML-Intel transaction is the additional funding it provides for ASML’s 450mm and EUV development programs. “Productivity improvements driven by enhanced wafer manufacturing technologies, especially larger silicon wafers and enhanced lithography technologies with EUV are direct enablers of Moore’s Law, which delivers significant economic benefits to consumers,” said Brian Krzanich, Intel senior vice president and chief operating officer, in a statement.
“The transition from one wafer size to the next has historically delivered a 30 to 40 percent reduction in die cost and we expect the shift from today’s standard 300-mm wafers to larger 450-mm wafers to offer similar benefits. The faster we do this, the sooner we can gain the benefit of productivity improvements, which creates tremendous value for customers and shareholders,” he said.
The first phase of this program consists of Intel committing to R&D funding of €553 million (approximately $680 million) to assist ASML in accelerating the development and delivery of 450-mm manufacturing tools, as well as an equity investment of €1.7 billion (approximately $2.1 billion) for approximately 10 percent of ASML’s pre-transaction issued shares. Intel will record the R&D investment as a combination of R&D expense and pre-payments on future tool deliveries.
The second phase of the program is conditioned upon ASML shareholder approval. It includes an additional commitment by Intel of R&D funding of €276 million (approximately $340 million) in ASML focused on accelerating EUV, as well as an equity investment of €838 million (approximately $1.0 billion) for an additional 5 percent of ASML post-transaction issued shares.
Intel will then hold a total of 15 percent of ASML’s issued shares. The total equity investment will be €2.5 billion (approximately $3.1 billion). As part of these agreements, Intel is also committing to advanced purchase orders for 450-mm and EUV development and production tools from ASML.
Both phases of the program are subject to standard closing conditions, including customary regulatory approvals. The companies expect both phases of the transaction to close after the shareholder vote in the third quarter.
“We are extremely encouraged that Intel has made these investments, which will benefit every semiconductor manufacturer in the industry,” said Eric Meurice, president and chief executive officer of ASML. “We hope to be able to announce additional investments by our other customers in the coming weeks.”
Mark LaPedus has covered the semiconductor industry since 1986, including five years in Asia when he was based in Taiwan. He has held senior editorial positions at Electronic News, EBN and Silicon Strategies. Most recently, he worked as the semiconductor editor at EE Times.