Intel Corp. on Monday said it had entered into a series of agreements with ASML Holding N.V. intended to accelerate the development of 450mm wafer technology and extreme ultra-violet (EUV) lithography totaling €3.3 billion (approximately $4.1 billion). The objective is to shorten the schedule for deploying the lithography equipment supporting these technologies by as much as two years, which will save costs improve productivity for semiconductor manufacturers.
"The transition from one wafer size to the next has historically delivered a 30% to 40% reduction in die cost and we expect the shift from today's standard 300mm wafers to larger 450mm wafers to offer similar benefits. The faster we do this, the sooner we can gain the benefit of productivity improvements, which creates tremendous value for customers and shareholders," said Brian Krzanich, Intel senior vice president and chief operating officer.
A critically important aspect of this transaction is the additional funding it provides for ASML's industry-leading EUV development program. When deployed in conjunction with 450mm wafer production, the productivity and cost benefits of EUV will be substantial for Intel and other semiconductor manufacturers. Intel was involved in the formation of the first EUV consortium in 1997. With these additional R&D investments for EUV, ASML and Intel hope to help lead the semiconductor industry in the transition to this critical technology.
To achieve its goals, Intel is participating in a multi-party development program that includes a cash contribution by Intel to fund relevant ASML research and development (R&D) efforts as well as equity investments in ASML. The first phase of this program consists of Intel committing to R&D funding of €553 million (approximately $680 million) to assist ASML in accelerating the development and delivery of 450mm manufacturing tools, as well as an equity investment of €1.7 billion (approximately $2.1 billion) for approximately 10% of ASML's pre-transaction issued shares. Intel will record the R&D investment as a combination of R&D expense and pre-payments on future tool deliveries.
The second phase of the program is conditioned upon ASML shareholder approval. It includes an additional commitment by Intel of R&D funding of €276 million (around $340 million) in ASML focused on accelerating EUV, as well as an equity investment of €838 million (roughly $1.0 billion) for an additional 5% of ASML post-transaction issued shares. Intel will then hold a total of 15% of ASML's issued shares. The total equity investment will be €2.5 billion (about $3.1 billion). As part of these agreements, Intel is also committing to advanced purchase orders for 450-mm and EUV development and production tools from ASML.
Both phases of the program are subject to standard closing conditions, including customary regulatory approvals. The companies expect both phases of the transaction to close after the shareholder vote in the third quarter.
ASML has stated its intention to sell up to a 25% aggregate stake in the company (on a post-transaction basis) to Intel and other semiconductor manufacturers in this program. ASML is currently in discussions with other customers and has publicly indicated it expects others in the industry to participate in the R&D and equity program. Regardless of the outcome of ASML's discussions with other customers and upon completion of this two-phase program, Intel's ownership stake in ASML will not exceed 15% of ASML's post-transaction issued shares and will be subject to lock-up and voting restrictions. ASML hopes to be able to announce additional investments by other customers in the coming weeks.
Intel intends to fund its R&D and equity investments in ASML from cash on hand at its offshore subsidiaries.