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Does ASML walk on water? Intel places first major immersion lithography tool order

15 October 2008 | By Mark Osborne | Editor's Blog

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ASML XT1950HIHaving claimed 65 percent of the lithography market in 2007, ASML positioned itself for further gains in 2008. The significant capital spending cuts by memory manufacturers this year, coupled to very tight spending from the major foundries, meant that not even Moore’s Law enablers such as lithography tool vendors would be immune from the serious slump in spending.

Gartner recently noted that of any equipment sector best able to weather the current storm, it would indeed be the lithography suppliers as leading-edge capital equipment spending was still a necessity to remain competitive.

Granted, the capacity buys have long gone out the window in 2008 but the classic technology buys remain. Of those, immersion lithography is at the top of the list.

So it was with great interest to listen to ASML’s quarterly conference call held today to see whether things were tanking or holding up, as wisdom would suggest!

ASML revenues falling as CapEx cuts take holdClearly from a revenue perspective, via the number of tool shipments, ASML is suffering along with the rest of the equipment suppliers. Revenue is down 20 percent in 2008, compared to 2007. Unit shipments are significantly down compared to the last few years. The key here is that the number of capacity-based shipments have all but stopped. Few i-Line, KrF or dry ArF tools are in the mix.

Instead, it is those immersion tools making up a bigger proportion of shipments, which also distort matters as they carry hefty ASPs of €21 million each. (Note ASML XT:1900 is said by sources to cost $42M and the Nikon S610C $32M)

ASML now claims that it has shipped over 110 immersion tools since inception of the technology. It claims 46 have been shipped so far in 2008 and has currently 27 in its order backlog. ASML also shipped 16 immersion tools in Q308 and received 16 new orders in the same quarter.

With a backlog of over €1 billion, and €1.6 billion in cash, ASML is still sitting pretty nicely, while others may not be so fortunate. But capital spending is projected to decline even further in 2009, according to recent projections from Gartner, so will ASML actually suffer in 2009?

There would seem little evidence to suggest that unit shipments will not be suppressed, especially for capacity expansions in the memory sector, but as for technology buys across memory, logic and foundry, ASML’s Eric Maurice had some interesting things to say in the call.

Maurice noted that the majority of DRAM manufacturers had yet to migrate to immersion tools that are required for 5Xnm migrations. He listed these as Micron, Nanya, Inotera, Qimonda, ProMOS, Winbond as well as Elpida and PSC. Of those just listed only Qimonda was said to be in prototyping mode, using immersion tools. Of course Samsung and Hynix had made that transition.

Looking back over the list, ASML has only Elpida and PSC (I will include Rexchip in that mix) that are not currently customers of ASML. On that point, Elpida is currently evaluating ASML’s immersion tools.

With the 5X migration set for 2009, ASML in theory should have a very strong year for immersion tool shipments and revenues.

On the foundry front, things remain less clear. Hit by a reduction in customer demand and slower node migrations, 2009 may be a technology buy period again for the foundries and all of them use ASML. Indeed, the formation of The Foundry Company means that Arab money streaming into AMD’s two 300mm fabs in Germany will simply divert to ASML as it can now ramp 45nm more aggressively at Fab 36 and fit-out Fab 38.

ASML SalesOn the logic IDM front (not many players left that can be counted as major), ASML has picked up the first significant immersion tool order from none other than Intel Corporation. Shipments are due in Q1 and Q2 next year as Intel prepares its 32nm migration, the first time Intel will use immersion technology.

Of course, ASML didn’t directly name Intel, but as the last remaining major IDM in the U.S., it gets harder to be descriptive only, especially when related to technology buys at the leading-edge.

After a period of less than successful trading with Intel over the last few years, which saw  Nikon gain a larger share of the lithography tool mix (Dry ArF) at Intel fabs, ASML has fought back with Intel’s move to immersion.

With Intel back in the fold, ASML must think it's walking on water and that 2009 may not be as bad as it once looked like being earlier in the year. Now all it needs to do is get EUV to 200wph and prices down to €30 million for insertion into the 22/13nm node range and it could gain a greater share of the future lithography market!

Update:

Editor response: Ok, a little clarification is required on the Intel/ASML tool order. At SEMICON West I had the opportunity to speak with people related to the Nikon win at Intel for the 32nm process/immersion node. I was informed that this win was temporary and that ASML’s immersion tools were being used by Intel for 32nm R&D and that findings there led to the ‘current’ strategy to stay with Nikon’s technology from dry to wet for that first node.

While readying the next generation technology for 2011-ish, which needed very-high NA as this would be the 22nm node for Intel, ASML had a very good chance of winning some tool orders for the 22nm development phase, based on the successful 32nm work.

The news that Intel has placed orders with ASML could confirm the 22nm development phase, as Intel works that far ahead on these things. It could also indicate that Intel may now use ASML’s immersion tools for 32nm alongside Nikon. This though seems less likely as Intel would have locked down litho choices by now for 32nm.

The point I was trying to say was that ASML had won some new immersion tool orders from Intel, even though Intel was starting 32nm next year, but using Nikon. This news highlighted that Nikon had a one node advantage but that was potentially that, as long as ASML got back in the game for the next node, which now seems to be the case.
 
After seeing the comments, I agree in that what I said was confusing, it inferred that ASML had won some of the 32nm business, when that wasn’t the case. 

Related articles

UMC places orders with ASML and TEL - 01 April 2011

Double take on Applied Materials targeting litho supplier ASML - 09 July 2008

ASML‚??s immersion lithography domination by numbers - 17 October 2007

SEMATECH starts extension work on immersion lithography - 09 September 2005

Tool Order: ASML bags a new bumper purchase order from TSMC - 14 June 2011

Reader comments

Do not say a bad word about ASML wink
By Litho on 27 October 2008
It is amazing how completely ASML biased Fabtech is.
By truth on 24 October 2008
If ASML fire more people who knows what will happen in the future. Nikon will be very happy.
By 32nm on 18 October 2008
"ASML‚??s immersion tools were being used by Intel for 32nm R&D;and that findings there led to the ‚??current‚?? strategy to stay with Nikon‚??s technology from dry to wet for that first node." It sounds like ASML's immersion tool wasn't that great, to lead to this decision.
By fglight on 18 October 2008
It's unfortunate that this article is misleading. ASML's share at Intel is falling in immersion vs dry ArF (Nikon will get all of 32nm immersion production needs with the 610C). It's the R&D;double patterning tools that fell into the backlog in the third quarter => not volume production until 2010. Get with the programme - ASML bought SVG just to get Intel, but Intel is clever enough not to let one vendor get that powerful!!
By didier on 17 October 2008
It's little bit confusing since NIKON was selected by Intel for all litho tools for 32nm per previous article.
By semiguy on 17 October 2008
great write-up... thank you...
By rjones on 16 October 2008

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