Fitch Ratings has recently revealed that ASML’s customer co-investment programme, which includes proposed 15% equity participation by Intel, is positive for the Dutch-based lithography company on many fronts, and will have wider benefits for the semiconductor industry.
The programme will see Intel take an initial 10% stake, rising to 15% subject to ASML shareholder approval for total cash proceeds of EUR2.5bn. Negotiations with Samsung (‘A+’/Stable) and TSMC (not rated) could lead to them taking strategic stakes of up to a further 10%. Importantly, strategic owners will make material commitments to fund ASML’s R&D for extreme ultraviolet (EUV) and 450mm lithography, as well as advance purchase commitments for these technologies, over the next five years.
Intel’s commitment highlights how embedded ASML has become in the industry’s supply chain, specifically in “feature shrink.” This is the physics of making chips smaller and improving the capabilities of devices like smartphones.
Intel estimates 30% – 40% cost savings and an NPV benefit to its cost structure of USD10bn. These savings will multiply across the industry and the move to 450mm will now be possible that much sooner. The non-voting and non-exclusive nature of Intel’s participation ensures that these benefits will be spread across the industry.
