"ASML's New Lithography Machine: Too Expensive!"

In the dynamic world of semiconductor manufacturing, significant advancements are often accompanied by high costs, and such is the case with ASML’s latest innovation: High NA Extreme Ultraviolet (EUV) lithography systemsThis technology, while leading the way in precision and capability, poses economic challenges that have been a subject of discussion among industry leaders and manufacturers alike.

Taiwan Semiconductor Manufacturing Company (TSMC), a major player in this field and ASML's prominent client, recently expressed hesitations regarding the pricing of these new machinesKevin Zhang, TSMC's Senior Vice President, acknowledged at a technology seminar in Amsterdam that while he appreciates the innovative functions of the High NA EUV systems, the associated financial commitment is substantialEach unit costs approximately €350 million (around $380 million) and is capable of printing extremely fine features on semiconductors with a minimal thickness of just 8 nanometersFor context, the machine's weight is comparable to that of two Airbus A320s, emphasizing the technological leap these devices represent.

This advanced lithography equipment is not just about size and capability; it serves as an essential barometer for the health of the semiconductor industryASML holds a unique position as the sole manufacturer of the most intricate machinery required for semiconductor production, their output reflecting broader market demand and the technological advancements of their clientsRecent developments include an order by Intel for these cutting-edge machines, with the first shipment expected to arrive at their factory in Oregon by the end of DecemberHowever, the timeline for TSMC's investment in this technology remains uncertain.

Looking ahead, TSMC's A16 node technology, which is anticipated to launch by the end of 2026, will reportedly not require the High NA EUV machines and can efficiently utilize older EUV toolsZhang stated that their existing EUV capabilities should be sufficient to meet their upcoming production needs

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Decisions on adopting ASML's new technology will depend on economic viability and technological balance, with Zhang withholding speculation on when TSMC might start investing in High NA machines.

The rising operational costs of semiconductor factories, including expenses related to infrastructure, tooling, electricity, and raw materials, present overarching challenges for the entire industryThese financial pressures are both collective and significant, influencing strategic decisions and potential investments across the board.

As TSMC deliberates on its options, Intel appears to be taking significant stridesReports indicate that Intel has secured a majority of the supply of High NA EUV machinery from ASML, having acted promptly while competitors like TSMC were still weighing their strategiesAs of the first half of the next year, Intel is poised to receive all five systems that ASML plans to manufacture in the upcoming production cycle.

Currently, Intel is in the process of launching the first High NA EUV machine at their Oregon facility, although full operational capability is not expected until 2025. Their swift acquisition strategy reflects Intel's goal of reclaiming leadership in semiconductor lithography, particularly after experiencing significant losses in their foundry business last yearTo revitalize this sector, Intel has also appointed Kevin O'Buckley, a seasoned executive with over 25 years of experience in the semiconductor industry, as the head of its wafer foundry operations.

In light of these significant investments and changes, Intel's approach towards High NA EUV technology is characterized by optimismMark Phillips, Intel's Fellow and Director of Logic Technology Development, noted that this new lithography advancement would empower Intel to enhance its future technology capabilities beyond their 18A processFurthermore, he emphasized that High NA EUV is expected to be more cost-effective for smaller features compared to the dual-patterning techniques currently utilized with low NA EUV.

Conversely, competitors like Samsung and SK Hynix from South Korea are adopting a more reserved stance toward High NA EUV technology

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Industry reports suggest that both companies may not gain access to this advanced equipment until later in the year 2024. Samsung, whose researchers have pointed out that the already implemented low NA EUV could be more efficiently utilized through dual-patterning methods or advanced packaging techniques, remains cautious about transitioning to High NA EUVThey recognize that while High NA EUV has potential, cost and performance challenges may limit its application, especially in memory chip manufacturing.

Interestingly, in February, Samsung announced plans to establish a semiconductor advanced processing research center in collaboration with ASML, with a goal of introducing High NA EUV equipment by 2027. This center is anticipated to invest around 1 trillion won (approximately $760 million), allowing Samsung to refine its methods in tandem with ASML engineers to effectively implement the new technologyThe focus here appears to emphasize a methodical development pace rather than hasty adaptation.

Similarly, SK Hynix is also gearing up to integrate High NA EUV processes into their production lines starting in 2024, including advanced DRAM prototypesThis suggests a target evolution towards incorporating advanced lithographic technologies in a planned and strategic manner to optimize cost and efficiency.

Regarding the future of EUV technology, analysts from Semianalysis have expressed a cautious outlook, raising concerns about the cost-effectiveness of High NA EUV tools compared to established low NA systems that utilize dual-patterning techniquesTheir research indicates that despite advancements, the cost per exposure with High NA EUV would remain higher, particularly as the industry pushes towards extremely small technology nodes like 1.4nm.

However, ASML has pushed back against these negative forecasts, asserting that High NA EUV offers competitive advantages in efficiency and cost in logical and memory applicationsFurthermore, a positive sentiment is also echoed by suppliers in the market, such as Mark Slezak of JSR USA, who believes that EUV still has a long runway for innovation within the industry.

Despite these optimistic projections, others within the field remain skeptical about the longevity of EUV technology

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