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ASML‚??s immersion lithography domination by numbers

17 October 2007 | By Mark Osborne | Editor's Blog

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The numbers coming out of ASML’s third quarter financial results regarding immersion lithography tool bookings, shipments and overall adoption cycles are quite staggering! 

ASML said that it had shipped 12 immersion tools in Q3 to 8 customers, including 4 to Japan. Considering that the adoption of immersion litho for volume production is first coming from NAND manufacturers we should assume most of those tools going to Japan are for Toshiba!

ASML also reiterated that it expects to ship 35 immersion tools in 2007 and these orders are rapidly shifting to the latest model - the TWINSCAN XT: 1900i. Indeed, ASML booked 22 orders in the quarter for the 1900i - currently the most expensive lithography tool money can buy (excluding EUV Alpha tools, that is!). Some of these were actually pull-ins from NAND manufacturers desperate to migrate to sub-50nm in an effort to remain cost competitive.

This is a significant ramp of a new tool that has helped the company increase its share of the immersion market to over 80 percent, according to ASML executives!

Although the current value of the backlog is lower at the moment compared to previous quarters, the fact that 61 percent of that backlog is for immersion tools shouldn’t be ignored.

Revenues from immersion tools made up 40 percent of Q3 financial figures with a whopping 72 percent coming from memory manufacturers.

NAND is the key sector adopting immersion tools, and apparently, several NAND manufacturers have still to place orders for delivery next year, thus allowing ASML to guide for a greater number of immersion tool shipments for 2008 compared to 2007. DRAM manufacturers are just starting their immersion tool purchase cycle, according to ASML executives, and interestingly, they don’t see logic IDMs adopting the technology in numbers until 2009.

This means that 45nm ramp won’t really happen until then. Don’t forget that Intel is using double patterning dry ArF tools at the 45nm node so AMD’s volume ramp as well as that of foundries is not a 2008 event!

It was no surprise to hear ASML talk about the major foundries backing off from tool orders. ASML claimed that this was due to the foundries’ uncertainty over both volume and technology application demand that will be required by customers in the first half of 2008. Basically, they are waiting to see what demand is really going to be before adding capacity after the holiday season, despite the fact that utilization rates in fabs is very high.

As has happened in recent years, December through February could see a flurry of orders coming from the foundries and very aggressive delivery dates requested.

It was interesting to note that ASML acknowledged that days of inventory have risen considerably of late, largely due to the longer cycle times experienced with immersion tools. However, I also think ASML is building more tools than the orders confirmed suggest so that it can meet short delivery dates from the foundries. They have done this before and I see no reason why they are not doing this again!

With foundries only making up 7 percent of revenues in the quarter, the ‘wait and see’ approach has perhaps reached it limits!

ASML executives also acknowledged that they expect to experience a similar spending pattern from customers in 2008 as they have done in 2007. That means that memory manufacturers will spend heavily in the first half of the year and trail off from there.

ASML now claims that it has 20 immersion customers around the world, and, though some are still at the process development stage rather than in volume production, this is a significant number.

A few snippets of information I picked up at Semicon Europa a week ago indicate that immersion orders for Nikon are also tracking upwards and that 2008 will see a strong order and shipment increase that could see Nikon regain some market share.

Canon, it would seem, has still to get its immersion program off the ground and looks more dead in the water than ever before!


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