ASML to Buy Cymer
“We have experienced some delay in EUV, basically caused by delays in developing the light source”, said Peter Wennink, ASML’s financial chief.
With that understatement, ASML succinctly explained its rationale for offering $2.6B in cash (25%) and stock (75%) to buy San Diego-based Cymer, the leading developer of EUV sources. Over the last year, ASML has sent about 500 of their engineers to work at Cymer’s EUV source development labs. But as EUV source development falls further behind schedule, it has become obvious that this infusion of manpower was not enough.
There is a nice symmetry at work here. Earlier this year ASML got Intel, TSMC and Samsung to buy 23% of ASML and invest in ASML R&D to boot. Just as the chip makers invested in their key supplier ASML to provide maximum financial stability during a turbulent time, ASML is investing in one of its most critical suppliers to make sure they keep the faith during a very difficult time. Will this help speed up EUV source development? I doubt it. But it will probably help prevent a worsening of the schedule and keep Cymer’s focus where it needs to be.
While everyone concentrates on Cymer’s EUV source development, it is important to remember that ASML’s and Cymer’s cash cow is 193-nm immersion lithography. As ASML dumps cash into EUV development, it has remained profitable due to its growing market share of 193-nm tools (now about 80%). But Cymer only supplies about half of the 193-nm lasers that ASML needs. The other half comes from Gigaphoton (formed in 2000 as a joint venture of Komatsu and Ushio). What will happen to Gigaphoton in the long term? You can bet they are trying to figure that out themselves about now. And what does this deal say about ASML’s faith in Gigaphoton’s EUV source development efforts? It seems ASML is willing to put all of its source eggs in one basket.