intel to acquire asml technology
Last Updated : GMT 16:22:18
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Intel to acquire ASML technology

Arab Today, arab today

Arab Today, arab today Intel to acquire ASML technology

San Francisco - Arabstoday

Intel Corporation will spend more than $4 billion to buy up to 15 per cent of ASML and bankroll the Dutch company’s research into costly next-generation chipmaking technology, a major vote of confidence in the European firm that sent its US shares soaring 6 per cent. Intel hopes to speed the adoption of the next generation of chip manufacturing processes from ASML by as much as two years. That will require intensive capital investment, but delivers billions of future savings by cutting chip production costs, analysts said. ASML, the world’s largest supplier to chipmakers of machines that etch circuits onto silicon wafers, may want to spread the risk of developing cutting-edge chip-making equipment, based on 450-millimeter wafer sizes and “extreme-ultraviolet” or EUV lithography. Intel will acquire an initial 10 per cent stake in its European supplier and tack on another 5 per cent if it wins shareholder approval, for a total of about $3.1 billion. It also benefits by being able to move on to larger wafer sizes. Apart from the savings that will bring, the chipmaker may also be moving to safeguard its current technology lead. “By accelerating the introduction of 450mm fabs, Intel will increase barriers to entry a lot and make it harder for small players to keep going,” said Pierre Ferragu, a senior analyst for Sanford C. Bernstein. “By supporting EUV, Intel probably anticipates continued accelerated shrink plans beyond 15 nm, and also a world in which cost efficiency matters more and more for them.” Intel and other chipmakers are grappling with slowing demand as consumers shift to mobile devices, and economic growth in Europe and even emerging markets is weakening. On on Monday, Advanced Micro Devices warned its second-quarter revenue may slide 11 per cent, blaming disappointing demand from China and Europe. RBC Capital analyst Doug Freedman estimates Intel can save about $2 billion a year on 450mm processes, versus the current standard of 300mm. Larger silicon wafers lower production costs because more chips can be sliced off them. “The transition from one wafer size to the next has historically delivered a 30 to 40 per cent reduction in die cost,” Chief Operating Officer Brian Krzanich said in a statement. “The faster we do this, the sooner we can gain the benefit of productivity improvements.” Under the agreement, the world’s top chipmaker gains no exclusive rights to future ASML products. But Freedman said Intel, as the sector leader, stands to gain if the overall industry benefits. “I was a little surprised that ASML did not offer exclusivity or preferential access,” Freedman said. But “if in fact they’re lowering the cost of technology in emerging markets, you’re opening markets as well.” Intel remains at the vanguard of computer processors but is seeing rivals like Samsung Electronics come on strong in application microchips for smartphones and other mobile devices. Analysts say the US company maintains a two-year lead over the competition but needs to spend heavily to safeguard that. ASML competes with Japanese groups Canon and Nikon. Its clients include Intel and Samsung Electronics. Ferragu said Intel’s decision to tie up with ASML might come as a blow to Nikon, which also researches and develops lithography processes. A shift to cutting-edge EUV helps push the natural progression of semiconductor technology advancement known as “Moore’s Law”, which posits that the average number of transistors packed on a chip doubles every 18 months. Intel will help finance $1 billion of research into 450mm and EUV chipmaking, both cutting-edge technologies expected to emerge in the decade’s second half. While many semiconductor companies outsource the fabrication of actual chips to third-party “foundries”, Intel is among the last remaining chipmakers that build and operate their own network of multibillion dollar production facilities, or “fabs”. “If Intel is able to ramp 450mm production ahead of the world’s fabs such as TSMC or Global Foundries et al, it may yet prove that real men have fabs,” said John Jackson from CCS Insight. From gulftoday

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