Intel Corp to buy 15% stake in ASML for $4 billion

Intel Corp 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.

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, world’s largest supplier to chipmakers of machines that etch circuits onto silicon wafers, may want to spread the risk of developing cutting-edge chipmaking 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.

No exclusive rights

Apart from the savings that will bring, the chipmaker may also be moving to safeguard its current technology lead.Under the agreement, the world’s top chipmaker gains no exclusive rights to future ASML products. ASML competes with Japanese groups Canon and Nikon. Its clients include Intel and Samsung Electronics.

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.

Intel is the first major chipmaker to sign up for ASML’s “customer investment” programme, under which it hopes to enlist partners to fund expensive research into 450mm wafer technology.

Under their agreement, Intel will pay €1.7 billion ($2.1 billion) for the initial 10 per cent slice of ASML, and a preliminary €553 million for research. The pact also involves advance orders of next-generation ASML chipmaking gear, strengthening the Dutch firm’s assurance to move ahead in developing the technology.