ASML employees pose in front of a partially completed skeleton of the company’s latest product. The High NA EUV tool, which is still under development, will cost about $ 400 million and will be used to build a new generation of computer chips.

ASML, semiconductor industry and stock giant, should think less. Or maybe more.

He builds cars the size of double-decker buses weighing more than 200 piecestin its quest to produce beams of focused light that create microscopic circuits on computer chips used in everything from phones and laptops to cars and AI.

The company lived through a rosy decade, its shares jumped 1,000% and exceeded 200 billion euros when it covered most of the world’s business on these lithography systems.

He is now gearing up to release a new $ 400 million machine for next-generation chips that he hopes will become his flagship by the end of the 2020s, but so far this remains an engineering challenge.

The heads of the ASML headquarters in the Dutch city of Veldhoven said that the prototype should be completed in the first half of 2023. They said the company and longtime research partner IMEC have set up an on-site test lab – the first – so leading chipmakers and their suppliers can study the machine’s properties and prepare to use production models as early as 2025.

However, as investors expect further dominance and growth to justify estimating ASML’s 35-fold return in 2021, there is little room for error if a company faces technical or supply chains.

“Now every check is green,” said Christoph Foucault, head of EUV programs at ASML. “But, you know, we still need to see it all [assembled] together. “

EUV stands for Extreme Ultraviolet, the wavelength of light used by the most modern ASML machines.

It got dark

The success of the project is also important for ASML customers, chipmakers seeking to expand production amid global shortages. Among them are American player Intel, South Korean Samsung and Taiwan’s largest TSMC, which produces chips for companies such as Apple, AMD and Nvidia.

Industry expert Dan Hutcheson of the VLSI study, which is not involved in the ASML project, said the new technology – known as the high-load version of the EUV – could provide a significant advantage to some chipmakers. “It’s a bit like who has the best gun,” he said.

“So either ASML does it or they don’t,” he added. “But if they do it and you don’t have your orders and you miss it, you immediately make yourself uncompetitive.”

He said TSMC eclipsed its competitors by integrating ASML EUV machines in the late 2010s – a mistake Intel CEO Pat Gelsinger promised not to do with High-NA anymore.

Lithography is a key factor in how small circuits on a chip can get, and High-NA promises a 66% reduction. The smaller, the better when making chips, because the more transistors you pack in the same place, the faster and more energy efficient the chip can be.

The illustration, published by ASML, shows the impression of how the pilot model of the latest ASML product, the “High NA EUV” lithography tool, will look from the outside when it is completed. Cars the size of a double-decker bus will cost $ 400 million each

The circuits are now approaching the atomic level, leading to predictions that Moore’s Law is nearing an end, a well-known 1960s observation that the number of transistors on a microchip doubles about every two years.

“If they (ASML) fail, it will be difficult to continue enforcing Moore’s Law,” said Jos Versteg, an analyst at Dutch bank InsingerGilissen, although he noted that engineers have challenged similar doubts in the past.

Since 2000, ASML has quickly taken market share in Japanese competitors Nikon and Canon, which are now mainly focused on older technologies. ASML controls more than 90% of the lithography market. No competitor is trying to build an EUV system, citing high development costs.

The shortage of ASML machines, which cost up to $ 160 million each, is a bottleneck for chipmakers who plan to spend more than $ 100 billion in the coming years to build additional manufacturing plants to meet demand.

High-NA cars will be about 30% larger than their predecessors, which themselves require three Boeing 747s to carry them in sections.

The optical system is prepared for testing in a vacuum chamber at the Carl Zeiss SMT in Oberkohen, Germany, in this undated photo. Zeiss is developing optical systems that will be part of the latest tool developed by ASML to create next-generation computer chips

IMEC, a nonprofit research group that collaborates with semiconductor companies, believes that setting up a lab in ASML could save up to a year on development time.

ASML said it has five orders for pilot machines to be delivered in 2024, and “more than five” orders from five different customers for faster production models with delivery starting in 2025.

But it’s not slam dunk. There are serious problems with the integration of many complex components, including the optical system of polished, hyper-smooth curved mirrors, which are built in a vacuum by German Carl Zeiss.

Versteg of InsingerGilissen said that while ASML enjoys an almost monopoly, its “prices depend on the performance of the machines”. Meanwhile, it has to sell EUV tools to fewer and fewer companies that make advanced chips, including memory chip makers SK Hynix and Micron.

ASML is also linked to the broader state of the cyclical chip industry, which some researchers expect to double annual sales for $ 1 trillion this decade.

Foucault is most concerned about supply chain problems.

“Right now, as is the case with every other product, we see some stress in the supply chain, and that, if you ask me today, is probably the biggest problem we have with High-NA.” – (c) 2022 Reuters

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