Original URL: http://www.theregister.co.uk/2012/07/10/intel_asml_deal/

Intel pops $4.1bn to save Moore's Law from repeal

'Shoots first' in deal with wafer-baker equipment-maker ASML

By Rik Myslewski

Posted in Business, 10th July 2012 19:13 GMT

Intel will invest $4.1bn in ASML, widely regarded as the world's leading semiconductor-lithography equipment manufacturer, in an effort to keep Moore's Law alive and kicking for the foreseeable future.

The deal includes $1bn in cash to support ASML's research and development efforts on extreme ultraviolet lithography (EUV), and on the step-up from today's 300-millimeter wafer-baking technology to 450-millimeter wafers.

Optical lithography is reaching its limits – the brick wall will likely be hit at around 14 nanometers or just below – but its follow-on, EUV, is proving fiendishly difficult to achieve at any reasonable cost or throughput, despite the fact that the first EUV research consortium was founded way back in 1997.

The move to 450-millimeter wafers is also a technical challenge, but one that is driven not by process shrinkage, but by pure financial considerations: the more chips that you can cram onto a single wafer, the higher the efficiency of the wafer-baking business, and the lower the cost per chip.

"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 Intel chief operating officer Brian Krzanich when announcing the ASML deal after markets closed on Monday.

Krzanich noted that wafer-size increases have in the past brought a 30 to 40 per cent reduction in costs per die, and he expects that the move from 300-millimeter to 450-millimeter wafers will result in similar savings.

The remaining $3.1bn that Intel will shovel off to ASML's headquarters in Veldhoven, the Netherlands, will buy Chipzilla a 15 per cent stake in the lithography-equipment manufacturer.

Details of Intel's investment in ASML

It costs Intel well north of $5bn to build a fab, so $4.1bn to help ensure there'll be equipment to put in it seems smart

According to Intel, the ASML investment will accelerate the development of 450-millimeter and EUV technology by as much as two years. The development of smaller, lower-power, and less expensive chips can't come too soon for Intel as it struggles to gain a foothold in the rapidly expanding low-power mobile market, which is currently dominated by chips based on the ARM architecture.

ASML isn't limiting itself to a deal with Intel alone. As the company announced, also on Monday, the 15 per cent stake taken by Intel is just the first part of a 25 per cent equity offering.

In a conference call following the deal's announcement, ASML CEO Eric Meurice said that after it had decided to seek minority investors for up to 25 per cent of the company, it entered into negotiations with Intel, Samsung, and the Taiwan Semiconductor Manufacturing Company (TSMC).

"Intel has been the first to shoot. They jumped quickly, before the other two," Meurice said. "TSMC and Samsung are still in negotiations."

Whether or not those two semiconductor giants will get with the program or how big their participation might be is far from settled. "We do not know if the other two with Intel will cover the full 25 percent," Meurice said. "TSMC and Samsung may participate to a smaller level leaving room for others to come in. We hope to have the three companies. Maybe we will have more. Or maybe we will stop at Intel if we cannot persuade the others."

Intel, for its part, has committed to "advanced purchase orders" for 450-millimeter and EUV development and production tools as part of the deal. The Reg would be willing to bet the farm that if Samsung and TSMC don't join in the remaining 10 per cent of the equity offering, Intel will be guaranteed first dibs on any technology arising from its $4.1bn investment.

Although, as the majority holder of the minority stake in ASML, it's likely that Intel has already secured its place at the head of the 450-millimeter and EUV lines. ®