Skip to Main Content.
Site navigation
Fidelity.com Home
  • Customer Service
  • Profile
  • Open an Account
  • Virtual Assistant
  • Log In
  • Customer Service
  • Profile
  • Open an Account
  • Virtual Assistant
  • Log Out
  • Accounts & Trade
    • Portfolio Log In Required
    • Portfolio
    • AccountPositions Log In Required
    • AccountPositions
    • Trade Log In Required
    • Trade
    • Trading Dashboard Log In Required
    • Trading Dashboard Log In Required
    • Active Trader Pro
    • Transfers
    • Cash Management Log In Required
    • Cash Management
    • Bill Pay Log In Required
    • Bill Pay
    • Full View Log In Required
    • Full View
    • Security Settings Log In Required
    • Security Settings
    • Account Features Log In Required
    • Account Features
    • Statements Log In Required
    • Statements
    • Fidelity Alternative Investments Program Log In Required
    • Tax Forms & Information
    • Retirement Distributions Log In Required
    • Fidelity Rewards+registered trademark Log In Required
    • Fidelity Rewards+registered trademark Log In Required
    • New Account Checklist Log In Required
    • Lending Solutions-Line of Credit Log In Required
    • Refer a Friend
  • Planning & Advice
    • What We Offer
    • Build Your Plan
    • My Goals
    • Financial Basics
    • Building Savings
    • Robo Investing Plus Financial Advice
    • Wealth Management
    • Find an advisor
    • Retirement
    • Life Events
    • Saving & Investing for a Child
    • Charitable Giving
    • Philanthropic Consulting
  • News & Research
    • News
    • Wealth Management Insights
    • Watch List Log In Required
    • Quotes
    • Quotes
    • Alerts Log In Required
    • Mutual Funds
    • Stocks
    • Fixed Income, Bonds & CDs
    • ETFs
    • Options
    • Markets & Sectors
    • IPOs
    • Annuities
    • Learning Center
    • Notebook
    • Notebook
  • Investment Products
    • Mutual Funds
    • Retirement & IRAs
    • Stocks and Trading
    • Crypto
    • Direct Indexing
    • Fixed Income, Bonds & CDs
    • ETFs
    • Options
    • Sustainable Investing
    • Cash Management & Credit Cards
    • Managed Accounts
    • 529 College Savings
    • Health Savings Accounts
    • Annuities
    • Life Insurance & Long Term Care
  • Why Fidelity
    • The Fidelity Advantage
    • Planning & Advice
    • Trading
    • Straightforward Pricing
    • Insights & Tools
    • Security & Protection
    • Marketplace Solutions
    • About Fidelity
    • Careers
  • Customer Service
  • Profile
  • Open an Account
  • Virtual Assistant
  • Log In
  • Customer Service
  • Profile
  • Open an Account
  • Virtual Assistant
  • Log Out
Content and data provided by various third parties and Fidelity − Terms of Use
  • Research >
  • Stocks >
  • News & Events >

Stock Details


  • Snapshot
  • Detailed Quote
  • Advanced Chart &
    Technical Analysis Opens in New Window
  • News & Events
  • Compare
  • Analyst Opinions
  • Research Reports
  • Key Statistics
  • Earnings
  • Dividends
  • Ownership & Insiders
  • Financial Statements
  • SEC Filings

RELATED RESOURCES

  • Stock Research Overview
  • Stock Screeners
  • Markets & Sectors
  • Fidelity Learning Center Opens in New Window
Print Format
Change Text Size:
  • Default text sizeA
  • Larger text sizeA
  • Largest text sizeA

FOCUS-Computer chip giant ASML places big bets on a tiny future

BY Reuters
— 1:00 AM ET 05/20/2022

(In paragraph 10, corrects Hutcheson's affiliation. VLSI was acquired by TechInsights in 2021.)

By Toby Sterling

VELDHOVEN, Netherlands, May 20 (Reuters) - ASML, a semiconductor industry and stock market giant, has to think smaller. Or maybe bigger.

It is building machines the size of double-decker buses, weighing over 200 tonnes, in its quest to produce beams of focused light that create the microscopic circuitry on computer chips used in everything from phones and laptops to cars and AI.

The company has enjoyed a rosy decade, its shares leaping 1,000% to take its value past 200 billion euros as it swept up most of the world's business for these lithography systems.

It's now preparing to roll out a new $400 million machine for next-generation chips which it hopes will be its flagship by the late 2020s but for now remains an engineering challenge.

Executives at ASML's headquarters in the Dutch town of Veldhoven told Reuters a prototype was on track to be completed in the first half of 2023. They said the company and longtime R&D partner IMEC were setting up a test lab on the spot - a first - so top chipmakers and their suppliers can explore the machine's properties and prepare to use production models as early as 2025.

Yet, as investors expect further dominance and growth to justify ASML's valuation at 35 times 2021 earnings, there is little margin for error should the company encounter technical or supply-chain snags.

"Every check is green right now," said Christophe Fouquet, head of EUV programs at ASML. "But, you know, we still have to see it all (assembled) together."

EUV stands for extreme ultraviolet, the wavelength of light used by ASML's most advanced machines.

The fortunes of the project are also important for ASML's customers, chipmakers racing to expand production amid a global shortage. They include U.S. player Intel (INTC), South Korea's Samsung and Taiwan's TSMC, the biggest, which makes chips for the likes of Apple (AAPL), AMD and Nvidia (NVDA).

Industry specialist Dan Hutcheson of TechInsights, who is not involved with the ASML project, said the new technology - known as a "High-NA" version of EUV - could provide a significant advantage to some chipmakers.

"It's a bit like who's got the best gun," he said.

"So either ASML makes it happen or they don't make it happen," he added. "But if they make it happen, and you don't have your orders and you miss out on this, you've immediately made yourself non-competitive."

He said TSMC eclipsed its rivals by integrating ASML's EUV machines first in the late 2010s - a mistake Intel (INTC) CEO Pat Gelsinger has vowed not to make again with High-NA.

Lithography is a key determinant of how small circuitry on a chip can get, with High-NA promising a 66% reduction. Smaller is better in chipmaking, as the more transistors you pack in the same space, the faster and more energy efficient a chip can be.

Circuitry is now approaching the atomic level, leading to predictions that the end is nigh for "Moore's Law", a famous 1960's observation that the number of transistors on a microchip doubles about every two years.

"If they (ASML) don't succeed it will become difficult to continue with Moore's Law," said Jos Versteeg, an analyst at Dutch-based bank InsingerGilissen, though he noted engineers had defied similar doubts in the past.

FIRST LIGHT ON SILICON

Since 2000, ASML has rapidly taken market share from Japanese competitors Nikon (NINOF) and Canon, which now mainly focus on older technology. ASML controls more than 90% of the lithography market. No competitor is attempting to build an EUV system, citing high development costs.

Shortages of ASML's machines, which cost up to $160 million each, are a bottleneck for chipmakers, who have plans to spend more than $100 billion in the coming years to build extra fabrication plants to meet demand.

The High-NA machines will be about 30% bigger than their predecessors, which themselves require three Boeing 747s to carry them in sections.

IMEC, a non-profit research group that cooperates with companies across the semiconductor industry, believes setting up the lab at ASML could save up to a year in development time.

ASML said it had five orders for pilot machines, which should be delivered in 2024, and "more than five" orders from five different customers for faster production models for delivery starting in 2025.

But this is no slam-dunk.

There are formidable challenges in integrating a host of complex components, including an optics system of polished, hyper-smooth curved mirrors, which are being built in a vacuum by Germany's Carl Zeiss.

Versteeg at InsingerGilissen said that while ASML enjoyed a near monopoly, its "pricing is dependent on the productivity of the machines". Meanwhile, it must sell EUV tools to the shrinking number of companies that make leading-edge chips, which include memory chip makers SK Hynix and Micron.

ASML is also tied to the wider fortunes of the cyclical chip industry, which some researchers expect to double past $1 trillion in annual sales this decade.

Fouquet worries most about supply-chain issues.

"Right now, and like with every other product, we see some stress in the supply chain, and this is if you ask me today, probably the biggest challenge we have with High-NA." (Reporting by Toby Sterling; Editing by Pravin Char)

Copyright © Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

More MU News

  • TSMC Weighs Multi-Billion Dollar Chip Plant Investment In Singapore
    Benzinga - 2:11 PM ET 05/19/2022
  • What Are Whales Doing With Micron Technology
    Benzinga - 12:14 PM ET 05/18/2022
  • Check Out What Whales Are Doing With Micron Technology
    Benzinga - 4:33 PM ET 05/13/2022
Fidelity Investments. Copyright 1998–2022 FMR LLC. 
All rights reserved. 

  • Terms of Use|
  • Privacy|
  • Security|
  • Site Map 
Close