TSMC, Like Intel, Invests in ASML for Smaller, Energy-Efficient Chips

TSMC is investing $1.4 billion for a 5 percent stake in ASML and to help fund R&D work into such technologies as 450mm wafers and EUV lithography.

Taiwan Semiconductor Manufacturing Co. is following Intel in investing in chip-equipment maker ASML, a move that is aimed at accelerating the development of faster, smaller and more energy-efficient chips that leverage such technologies as 450-millimeter tools and extreme ultraviolet (EUV) lithography.

TSMC executives announced Aug. 5 that their company had invested about $1.4 billion for a 5 percent stake in ASML and to help fund ASML€™s R&D programs as it looks to adopt next-generation chip-making technologies while slowing the escalating manufacturing costs. The announcement comes a month after Intel officials said they were investing $4.l billion in the Dutch company in an effort to gain leverage in a highly competitive market that includes the likes of TSMC and Globalfoundries.

Like Intel, TSMC€™s investment is part of ASML€™s Customer Co-Investment Program, which the company announced in July.

€œWe are confident that the additional funding for ASML€™s research and development programs will help secure and accelerate EUV development activities, in parallel with the necessary focus on improved performance of existing optical lithography tools and speed up the deployment of new technologies for 450-millimeter wafers,€ Shang-yi Chiang, TSMC€™s executive vice president and co-chief operating officer, said in a statement. €œThis effort will help the industry control wafer cost, and therefore protect the economic viability of Moore€™s Law.€

The research in developing 450mm waters will enable TSMC, Intel and others to manufacture more chips more quickly. Longer-term, the vendors will see the benefits from the development of EUV lithography, an immature technology that holds promise as chips continue to shrink in size.

The goal of ASML€™s co-investment program is to generate the funds needed to accelerate the development of such technologies for the entire industry, according to ASML CEO Eric Meurice.

€œThese technologies will benefit the entire industry and are not restricted to our co-investment partners,€ Meurice said in a statement.

ASML hopes to bring the level of investment in the company to 25 percent equity through the co-investment program. Intel€™s investment gave the company about a 10 percent stake in ASML.

In a research report following the Intel announcement last month, Charles King, principal analyst with Pund-IT Research, said that such investments are critical to developing such technologies as 450mm wafers and EUV lithography.

€œThe IT industry loves to natter on about the benefits of innovation, and consumers tend to fixate on whatever shiny new thing comes to market,€ King wrote in a July 11 report. €œBut getting from the here and now to that glistening, magical innovative future requires a hell of a lot of hard, practical work in materials science, design, manufacturing and production. In essence, successful vendors are a bit like ballet stars€”displaying a level of grace on stage which, when successful, never hints at the months and years of effort required to appear effortless.€

The companies said the latest investment is an expansion of a partnership that included work on the development of 193nm immersion lithography technology. TSMC€™s investment comes at a busy time for the company. The company last month announced that it netted about $1.4 billion in profits during the second quarter, a 16 percent increase over the same period in 2011. Revenue increased 13 percent, thanks in large part to the growing demand for smartphone chips.

Also late last month, TSMC and ARM Holdings, whose chip designs are found in most smartphones and tablets, announced a deal to team up on creating low-power chips for mobile devices and servers that leverage TSMC€™s FinFET technology.

TSMC€™s FinFET technology is similar to Intel€™s 3D Tri-Gate transistor architecture found in the company€™s €œIvy Bridge€ processors. The Tri-Gate technology moves away from the flat "planar" circuitry of previous transistor designs to a three-dimensional structure, which enables more transistors to be put onto the increasingly smaller chips and reduces electrical leakage.

TSMC€™s FinFET technology is similar, though it offers two rather than three gates. Both TSMC and Intel have been working on the 3D transistor designs for more than a decade, though Intel was the first to commercialize it.