Traditional Model of Funding Semiconductor Equipment is Broken?
At Semicon a few weeks ago the big news was that Intel was making a big investment in ASML as a way of funding two development programs: extreme ultra-violet (EUV) and 450mm wafers. This week TSMC announced that they would join the program too, committing 275M Euros over a five year period. They are also taking a 5% stake in ASML. ASML have said that they are also talking to some other smaller vendors.
Both these investments are a sign that the traditional model of funding semiconductor equipment is broken. Historically, the equipment companies would fund the investment out of their revenues and recover it by selling equipment. Two things have changed though. The first is that the cost of the development has grown huge, too risky for the equipment companies to undertake on their own without a level of risk sharing with the semiconductor manufacturers. The other problem is that nobody knows how many more process generations there will be that use this new generation of equipment.
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