Intel invests €4bn in Dutch technology firm

INTEL HAS announced a $4.1 billion investment in Dutch semiconductor equipment maker ASML, in a sign of the industry’s anxiety about maintaining the pace of chip miniaturisation over the next decade.

The world’s biggest chipmaker is committing $1 billion to ASML’s research and development programme as well as buying a 15 per cent equity stake in the company for $3.1 billion.

Intel’s money will help accelerate the development of extreme-ultraviolet (EUV) lithography, a new manufacturing technique that equipment makers have struggled to perfect, but which is seen as the key to continuing to produce smaller chips.

ASML said the stake would give Intel limited voting rights and the money would be returned to shareholders through a “synthetic buyback”, including a reverse stock-split that would prevent dilution.

The Dutch company said it was talking to a number of customers about similar investments. It has set a limit of a 25 per cent stake sale and RD funding for an aggregate value of €4.19 billion in share sales and €1.38 billion in RD investment to be received between 2013 and 2017.

Intel and ASML said the cash injection would also help with the development of equipment that can handle a larger size of the circular wafers from which chips are cut. The next-generation 450mm- diameter wafers will contain roughly twice as many chips as existing 300mm wafers, bringing cost reductions of 30-40 per cent for chipmakers.

However, to continue to reduce the size of transistors and circuit widths down to 10 nanometres – or billionths of a metre – and below, EUV has emerged as the industry’s best hope of maintaining Moore’s Law, the 1960s prediction that the number of transistors on a chip will double roughly every two years.

The investment by Intel represents chipmakers taking more financial responsibility for the transition to 450mm wafers.

The switch has been delayed partly over arguments over who would pay for it.

Equipment vendors have complained they footed the bill for the transition from 200mm to 300mm wafers in the early 2000s, while the chipmakers benefited from lower costs. – Copyright The Financial Times Limited 2012