The first ‘EUV devices’ are on the market, but that’s only the beginning. The number of EUV layers in chips will keep increasing and that’s good news for ASML – but also a bit of challenge.
ASML CFO Roger Dassen called it a “momentous quarter” for EUV lithography: the first devices with EUV-made chips have been sold. In August, Samsung launched the Galaxy Note10 smartphone line, powered by 7nm SoCs fabbed in-house. And early October, TSMC confirmed shipments of N7+ chips had commenced. The recently launched Huawei Mate 30 smartphone, for example, has its processor manufactured at the Taiwanese foundry.
And this is just the beginning, as far as deploying EUV is concerned. On average, Samsung and TSMC incorporate 10 EUV layers in their 7nm chips. The 5nm node, which is right around the corner, will double that. Even before that, both chipmakers will start a 6nm half-node, in which EUV use is presumably also stepped up compared to 7nm. Additionally, production capacity will ramp up in anticipation of high demand for 5G and AI chips. And, to top it all off, DRAM manufacturers are starting to adopt EUV for their next-generation memory chips.
So that’s a lot more EUV layers, which means a lot more EUV scanners will be needed. This is reflected by the exploding order intake at ASML last quarter: 5.1 billion euros, mainly driven by a whopping 23 orders for EUV scanners. EUV profitability is not yet on par with DUV, but it’s safe to say ASML is really starting to reap the rewards of twenty years of development.
“This is the right point in time to express a big thank-you to everyone, not just at ASML but also in the ecosystem, who was involved in making this happen,” said Dassen in a video statement. “[The achievement] is fundamental in creating a solid underpinning for a very bright future for ASML.”
Like always, it’s ASML’s job to get all those machines in its customer’s fabs on time. Already some delays have manifested themselves: instead of the scheduled 30, 26 EUV scanners will be shipped this year. The remaining four will be postponed to early 2020. This is caused by a few weeks of delay in the supply chain, specifically the modular vessel for the EUV source powering the NXE:3400C scanner – an issue that has now been resolved.
It’s not entirely clear if the four systems moving into 2020 affect the projected number of shipments in that year. Previously, capacity was estimated at 30-35 systems, so 39 shipments in 2020 if ASML plays catch-up. Answering questions from investors, CEO Peter Wennink set the goal at 35 shipments but qualified that as a conservative projection. “We do have more capability,” he said, later adding that through cycle time reductions and improving production efficiency, capacity could eventually be pushed to 50 units per year without building additional facilities.
Financially, the year developed pretty much as ASML predicted. Sales were mainly driven by logic, which started to pick up after the first quarter (2.2 billion euros) and accelerating as the year progressed. ASML expects to end the year with 3.9 billion euros of quarterly sales, which would be more than enough to top last year’s record sales. “Considering the market, that’s a significant feat,” commented Dassen, referring to the ailing memory market.
Looking forward, ASML is optimistic about 2020 as well. Logic will continue to drive demand, and at some point, the memory market is expected to go into recovery mode – which historically brings big swings in demand. When exactly that will happen, is hard to pinpoint, however.