ASML isn’t utilizing its full EUV scanner manufacturing capacity this year, even though customers would love to get more. Why?
There are worse businesses to be in right now than EUV lithography. Last year, ASML’s revenue from EUV system sales increased almost 60 percent, to 4.5 billion euros, or 32 percent of total revenue. Next year, the Veldhoven-based equipment maker projects another 28 percent increase in EUV system revenue, to 5.8 billion euros. Yet, that number could have been higher – perhaps by close to another billion higher.
That must have something to do with corona, right? Even if ASML’s operational difficulties and disruptions in the supply chain have largely been smoothed out, there’s still a lot of uncertainty looming over end markets and the world economy as a whole. While the semiconductor industry may have floated through crisis-year 2020, you’d think that at some point, the appetite for the most advanced chips, and hence for the machines that are needed to manufacture them, must take a hit.
While that may or may not happen, reticence is not why ASML isn’t going all out on EUV manufacturing this year, CEO Peter Wennink told Bits&Chips in an interview following the presentation of Q4 2020 and full-year results (see inset “ASML doubles revenue in 5 years”). Two other events that shook the semiconductor industry last year are to blame.
ASML recognized 31 EUV systems in its revenue this year, with another 4 being delayed. About a year ago, the company announced that EUV scanner manufacturing capacity would increase to 45-50 scanners in 2021, mainly thanks to driving down the cycle time. EUV unit shipment this year still won’t surpass 40, however. “We can manufacture the 45-50 scanners in Veldhoven, except for the fact that we told our supply chain we would make fewer,” says Wennink.
ASML didn’t order the parts for 45-50 scanners, first, because Huawei got blacklisted by the United States. Per last spring, even non-US companies need Washington’s permission to supply the Chinese smartphone and network gear company – unless they don’t employ any technology of US origin to manufacture it. “The ban had a major impact on the capacity of TSMC at the 5nm and 3nm node,” explains Wennink. The Taiwanese foundry put a few EUV scanners on hold.
Next, around the start of Q3, Intel asked to push out a few orders, Wennink continues. He didn’t go into details, but it’s no secret that Intel is having manufacturing issues – again. After suffering years of delays at 10nm, the company announced in July that development at the 7nm node hit a roadblock too. That alone may explain the push-out of EUV orders.
Intel is also considering outsourcing production. This wouldn’t impact ASML’s sales in the long run – somebody needs to make the chips – but it may have affected some existing orders.
Bigger than ever
The unfortunate part is, now that the smoke has cleared up, TSMC, in particular, must regret its previous assessment of the market. Filling up the gaps left by Huawei proved remarkably easy. In fact, the mega capex hike announced only a week ago indicates the appetite for advanced chips is bigger than ever. “In hindsight, there’s a demand for more EUV scanners than we anticipated,” confirms Wennink. “Now, our focus is on giving our customers as many wafers per day from the systems they have.”