TSMC Invests £850m Into Future Chip Technology

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest independent chip foundry, has announced it will invest €1.11 billion (£882m) into ASML, a Dutch circuit printer maker.

TSMC hopes the deal will enable the company to produce smaller, cheaper chips with more processing power.

As part of the agreement, the chip manufacturer will acquire a five percent equity stake in ASML. This follows a similar $4.1 billion (£2.6bn) investment into the company by Intel, announced last month.

Bigger wafers, smaller chips

ASML, headquartered in Veldhoven, Netherlands, is Europe’s largest chip equipment maker. As of 2010, it was responsible for 67 percent of worldwide sales of lithography machines, which print circuit patterns onto chips.

The Dutch company announced the joint investment project for its clients on 9 July, inviting Intel, Samsung and TSMC to participate. Intel was the first company to join the project while the South Korean firm has not announced its decision yet.

The agreement requires the Taiwanese manufacturer to make an investment of €838 million (£666m) in ASML in exchange for five percent of the company’s equity. In addition, TSMC has committed to invest €276 million (£219m) in ASML’s research and development programmes over a period of five years.

The money will help create machinery that can work with a larger silicon wafer size and will result in more chips produced from a single wafer, reducing manufacturing costs. The current standard size of a wafer is 300mm. ASML said that machines using the new 450mm-standard may be available as early as 2018.

TSMC and Intel have both said their investment will also help to speed up the development of extreme ultraviolet lithography (EUV), a process that could reduce the thickness of chips and lead to faster microprocessors.

Theoretically, EUV could enable production of chips which are just 10nm thin. For comparison, Intel’s current top-of-the-range Ivy Bridge chip thickness is 22nm.

“Productivity improvements, driven by enhanced wafer manufacturing technologies, especially larger silicon wafers and enhanced lithography technologies with EUV, are direct enablers of Moore’s Law, which delivers significant economic benefits to consumers,” said Brian Krzanich, senior vice president and chief operating officer at Intel.

The objective of the co-investment program “is to secure and accelerate key lithography technologies,” ASML CEO Eric Meurice said in a statement to Bloomberg. “These technologies will benefit the entire industry and are not restricted to our co-investment partners.”

Following the announcement, TSMC shares hit their highest point in a month. Overall, the stock of the company has gained 6.7 percent this year. ASML has also seen gains.

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