Samsung to invest $975m in ASML

ASML, the world’s top chip equipment maker, said Samsung Electronics would invest 779 million euros ($975 million) in its research into costly next-generation chipmaking technology and in buying a 3 per cent equity stake. ASML, based in the Netherlands, has already signed up Intel Corporation and Taiwan Semiconductor Manufacturing Company (TSMC) in recent weeks with similar deals to fund and fast-track its research. ASML’s co-investment programme is intended to tie in customers and speed up the development of new technology that will eventually lead to much cheaper gadgets, such as smartphones and tablet computers, and cement its position as the market leader ahead of Nikon. Intel said in July it would spend more than $4 billion to buy up to 15 per cent of ASML and fund its research. Within weeks, TSMC signed up as well, agreeing to invest 276 million euros in research over the next five years and to pay 838 million euros for a 5 per cent equity stake. Samsung has agreed to similar terms and will invest 276 million euros in research and pay a further 503 million for a 3 per cent equity stake in ASML. As customers, the three groups stand to benefit by speeding up the adoption of the next generation of chip manufacturing processes from ASML by as much as two years. There are two areas that ASML wants to fast-track. One is the move to a new chip-making standard based on bigger wafers, as more chips can be produced if the diameter of the wafers is increased to 450 millimetres from 300 mm, leading to significant cost savings. The other concerns an advanced chip-making technique known as extreme ultraviolet or EUV lithography, referring to the light source used in the lithography machines to make tinier but more powerful semiconductors. 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. The deal completes ASML’s so-called co-investment programme announced in July, with which the company seeks to accelerate product development. Samsung, Intel and TSMC have now agreed to buy 23 per cent of ASML for 3.85 billion euros, and the Dutch manufacturer said it no longer plans to solicit the participation of other customers. “ASML is getting the maximum amount to fund research and development costs, and Samsung opted for only a 3 per cent equity stake instead of the 5 per cent that was still available,” said Niels de Zwart, an analyst at ING Group NV in Amsterdam who recommends holding ASML shares. “That is good news for existing shareholders.” Under the investment programme, ASML will speed up the costly development of extreme ultraviolet, or EUV, technology, which will help shrink the size of chips while increasing their capacity and speed for devices such as mobile phones and tablet computers. The funding from Suwon, South Korea-based Samsung, Intel and TSMC should also allow ASML to step up the transition to a new chipmaking standard that relies on 450-millimeter disks of silicon, compared with the current 300-millimeter standard, a shift that will enable manufacturers to produce more chips faster. The investment programme is “a win-win,” giving ASML funding and allowing the shareholders to benefit from a possible appreciation in the company’s value, ASML Chief Executive Officer Eric Meurice said after announcing the plan last month. Taiwan Semiconductor Manufacturing agreed to invest 1.11 billion euros ($1.4 billion) in ASML Holding, joining Intel Corporation in taking a stake in Europe’s largest chip-equipment maker to secure future technology. TSMC will acquire a 5 per cent equity holding in Veldhoven, Netherlands-based ASML for 838 million euros and invest a further 276 million euros in research and development of next-generation lithography technologies, ASML said. TSMC will acquire a 5 per cent equity stake in ASML Holding for 838 million euros and commit to invest a further 276 million euros in research and development of next-generation lithography technologies. From gulftoday