ASML's next chip challenge: rollout of its new $350 mln 'High NA EUV' machine

CANON

09/02/2024 17:02

By Toby Sterling
       VELDHOVEN, Netherlands, Feb 9 (Reuters) - Chip
toolmaking giant ASML  ASML.AS  said on Friday it was gearing up
production of its new $350 million "High NA EUV" machine, a
device the size of a double decker bus central to its bid to
keep its lead in a $125 billion market.
    The machine, which went on display for the first time on
Friday in the Dutch headquarters of Europe's largest tech
company by market value, is aimed at Intel  INTC.O  and other
makers of the highest-end semiconductors.
    ASML said it was expecting to ship "a number" of them this
year, and there was still work to do on customising and
installation. 
    "We keep engineering and developing and there's a lot of
work to be done to calibrate it and make sure it fits into the
manufacturing system," ASML spokesperson Monique Mols said.
"There's also a steep learning curve for us and our customers."
    ASML is the only maker of a key technology - extreme
ultraviolet (EUV) photolithography - needed to manufacture the
most advanced chips.
    High NA EUV is the next generation of that technology. But
analysts said it was an open question how many customers are
ready to switch over to the high-cost devices.
    "While some chipmakers may introduce it earlier in an
attempt to gain technology leadership, the majority will not
adopt it until it makes sense economically," Jeff Koch of
Semianalysis, said.
    Customers could choose to wait and squeeze more out of
existing  tools. Koch's own calculations suggested it would only
become cost effective to switch over from the older technology
around 2030-2031.
    "This means ASML is likely to have excess High-NA capacity
between their factory ramp in 2027-28 and full adoption in
leading-edge logic a few years later," he added.
    ASML CEO Peter Wennink told Reuters in January analysts may
be underestimating the technology.
    "Everything that we're currently seeing in the discussion
with our customers is that High NA is cheaper," he said in an
interview.
    Greet Storms, head of ASML's High NA product management,
said on Friday an inflection point is coming around 2026-2027.
    "This is the point clients will take it into volume
production," she told reporters.    
    Intel has already taken delivery of one pilot device, and
said it plans to start production next year, without giving
details on the scale of the operation. 
    TSMC  2330.TW  and Samsung  005930.KS  have said they intend
to use the tool but have not specified when.
    ASML says it has taken between 10 and 20 orders to date -
including pilot devices for memory specialists SK Hynix
 000660.KS  and Micron  MU.O  - and is building capacity to be
able to deliver 20 annually by 2028. 
        None of them will go to China, ASML's second-largest
market last year, as the United States seeks to curb exports of
cutting-edge technology there and stymie Beijing's semiconductor
ambitions. 
  
        Last month though, the company, considered a bellwether
for the chip industry, 
    reported
     a robust order book which soothed investors' concerns that
limits on  China would hurt its performance.
  
    A quick take-up of the tool would boost ASML's sales and
margins and could extend its dominant position in the market for
lithography systems, machines that use light to help trace out
patterns on silicon wafers that will eventually become the
circuitry of computer chips.    
    It says the High NA tool will let chipmakers shrink the size
of the smallest features on their chips by up to 40%, allowing
density of transistors to nearly triple.
    ASML competes with Nikon  7731.T  and Canon  7751.T  of
Japan to make the lithography machines used to make relatively
older generations of chips. 
    But in the late 2010s, the Dutch firm became the first and
only company to market a lithography tool using EUV, or 13.5
nanometre wavelength light.
    Both the original and High NA machine create EUV light by
vaporizing droplets of tin with twin laser pulses 50,000 times a
second.
    ASML says the High NA machine's biggest change is a larger
optical system consisting of irregularly shaped mirrors, made by
Carl Zeiss, polished so smooth they must be kept in a vacuum.
They collect and focus more light than their predecessors - High
NA stands for high numerical aperture - which is what the
company says leads to better resolution.

($1 = 0.9269 euros)

 (Reporting by Toby Sterling; Editing by Andrew Heavens)
 ((toby.sterling@thomsonreuters.com;))