Nearfield far from becoming the new ASML
It must feel uncomfortable. You’re barely out of the starting blocks and you’re already placed on a pedestal by our naive quality newspapers. NRC Handelsblad took it to the extreme by comparing Nearfield Instruments to the top three in Dutch semicon equipment in an interview with co-founder and CEO Hamed Sadeghian.
“If everything goes the way the top executive envisions, Nearfield will be a billion-dollar company within two years, just like the well-known names in the Dutch high-tech sector,” NRC wrote. Without delving much deeper, the newspaper headlined: “Nearfield is well on its way to achieving a position as a billion-dollar company, just like ASML, ASMI and Besi.”
Now, with “billion-dollar company,” are we talking about market capitalization or revenue? If it’s about revenue, the designation is too grand for Besi as well. Although the heavily overvalued back-end semicon company from Duiven has a market capitalization of nearly 9 billion euros, it makes a turnover of ‘only’ 580 million. ASM does over 2.6 billion and ASML ten times as much: 27.6 billion (all annual figures from 2023).
Is Nearfield really capable of soaring to these heights within two years? For that, it would have to be at a sales level of 200-500 systems by 2027, at a price level of, say, 2-5 million euros for its fastest Quadra machines. I expect that’s going to take a few more years.
Value in an IPO, then? The bar is low for anything AI-related, I admit, but in the current competitive landscape, that, too, seems out of the question to me. Nearfield isn’t an indispensable link yet in chips for the AI value chain – though there’s certainly potential there. In any case, for a valuation of a billion or more, it’s necessary to have an installed base with more than half of the top buyers of high-end metrology (TSMC, Samsung, Intel, SK Hynix and Micron).
In vying for their business, Nearfield has to fight its way into an established market. Worldwide manufacturers sell some 600-800 million dollars worth of AFM microscopes and materials. Incumbents Bruker and Park Systems each currently grab a fifth of that. Making roughly 100 million euros in AFM sales with a healthy margin, they’re financially sound and can invest through their cash flow. They also cater to chip manufacturers, a market with substantial growth potential. Observers estimate total AFM metrology sales at one billion euros a decade from now. I wholeheartedly grant Nearfield the whole pie, but I fear they’ll have to share it. If only because the Samsungs and Intels of this world aren’t waiting for a second monopolist in chip technology.
ASML may even become a competitor for Nearfield’s Audira product line, which allows looking below the chip surface. Together with Delft University of Technology, the litho giant is researching a way to do that with soft X-rays, even non-destructively. This wavelength-multiplexed multi-mode EUV reflection ptychography uses around 13 nm EUV light. It’s probably going to be extremely expensive, but we know from the history of semicon lithography that optics is a winning technology because of its very high throughput capabilities. I expect that ASML will soon come out with an instrument that can map a chip image field in a flash. Topography, underlying structures and all. If this machine is successful, it doesn’t mean Nearfield’s AFM sonography doesn’t stand a chance, but its Audira systems will be pushed into a niche.
Penetrating an established market isn’t possible with me too machines. That can only be done through a competitive edge, with machines that give customers a significant advantage. That may be good news for Nearfield. Its equipment – as well as that of another newcomer, UK’s Infinitesima – is said to be about a hundred times faster than the incumbents’ systems.
Nearfield isn’t going as fast as top executive Hamed Sadeghian aspired to two years ago, but it definitely has momentum. It significantly increased the throughput of its Quadra metrology systems and raised 135 million euros in investments. In addition, it says it has received orders for several machines from “an Asian customer.” In an interview with Link Magazine, the word “foundry” was dropped, but it could very well be existing customer Samsung. The Korean company also provides chip manufacturing as a service and, through its investment arm, it’s also transferred money to Rotterdam. Nearfield wouldn’t say – even without naming names – whether the latest large orders came from a chip manufacturer other than Samsung. With that, there’s a good chance that it’s indeed the Korean electronics giant.
As a matter of fact, it would fit well with Samsung’s needs. It has major problems getting its high-bandwidth memory production on track to get back on par with SK Hynix – Nvidia’s current main supplier for HBM. Furthermore, Samsung is positioning its foundry business as a one-stop shop – just like Intel. In addition to producing chips for customers, both also focus on advanced packaging, the technology needed to assemble very dense systems with many different chips. The more compact these superchips are, the more energy efficient and the better the performance.
According to Yole Group’s Vishal Saroha, Samsung is currently investing more than SK Hynix in hybrid-bonding equipment from Besi. This also explains the need for AFM metrology. Hybrid bonding demands very clean surfaces with precisely dimensioned copper junctions. Infinitesima, Nearfield and insiders point out that post-etch and post-CMP (chemical-mechanical polishing) are the primary application areas for AFM metrology, making it ideally suited for HBM manufacturing with hybrid bonding.
CEO Sadeghian has made it clear that he desperately needs the new injection of capital to scale up everywhere. Customers demand 24/7 support, ie local presence. So, he’ll be extra excited to see the next big (non-Samsung) order come in.
As ASML also experienced in the mid-1990s, Samsung is a very demanding customer. On the one hand, a relationship like that provides a wealth of information, but on the other hand, it eats up all the attention. It’s going to be a challenge for Nearfield to turn the customization that Samsung is guaranteed to ask for into clout.
Main picture credit: Nearfield
