A single $400 million lithography machine has gained new buyers: Samsung and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR have reversed their stance, with the three major chip giants fully embracing ASML Holding NV ADR (ASML.US) and its most advanced High NA EUV technology.

It has been noted that ASML Holding NV ADR (ASML.US) has secured commitments from top chip manufacturers to utilize its latest semiconductor production equipment while moving towards a broader collaboration agreement to meet the surging demand for more powerful artificial intelligence technology. Samsung Electronics and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR plan to begin mass production of ASML Holding NV ADR's High NA EUV lithography equipment in 2028 and 2030, respectively, using these machines that can each cost up to $400 million alongside Intel Corporation. Samsung is a leading manufacturer of memory chips, while Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR is a major producer of custom chips for companies such as NVIDIA Corporation and Apple Inc. These four companies have also reached a profound yet crucial transformation agreement regarding the technical format of photomasks, a core component of semiconductor production. As the industry races to keep pace with the skyrocketing demand for AI, this alliance plans to transition from the current standard 6-inch photomasks to 12-inch versions, aimed at increasing productivity and reducing costs. Photomasks are similar to woodblocks used for repeated printing of the same pattern, with the difference being that they are printed onto silicon wafers using light. Although the shift to larger photomasks has long been considered complex and expensive, this collaborative initiative presents the potential for substantial gains in chip production. ASML Holding NV ADR's Chief Technology Officer, Marco Peters, stated that this new technology could boost the throughput of High NA machines by 40%, while simplifying the design process. In an interview, Peters remarked, "This is a tremendous opportunity and certainly signifies a leap in productivity." ASML Holding NV ADR is currently the only company in the world capable of manufacturing extreme ultraviolet (EUV) lithography equipment, which is essential for producing the world's most advanced AI accelerators and similar chips. The company introduced low numerical aperture (Low NA) EUV in 2019 and has been working with customers to promote the adoption of more advanced High NA machines. The factories of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR carry out foundry production for clients ranging from NVIDIA Corporation and AMD to Qualcomm, and the company has been cautious in adopting more expensive equipment, believing that the productivity gains do not yet warrant the costs. However, according to a statement on Tuesday, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR currently plans to adopt a High NA system based on existing 6-inch photomasks starting in 2030. The two companies aim to build a test line for producing 12-inch photomasks by 2031 as one of the processes for deploying this technology alongside High NA tools by 2033. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's CEO, C. C. Wei, stated in the announcement, "Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has always believed in the power of collaboration to overcome technological barriers before they become economic barriers in the semiconductor industry." Similarly, Samsung, which also provides logic chip foundry services and is one of the world's largest memory chip manufacturers, plans to begin using ASML Holding NV ADR's High NA machines for computer memory by 2028. The South Korean company stated in a separate announcement that it would "work closely with industry partners to develop the necessary photomask technology and supporting infrastructure." The global chip shortage driven by the tremendous demand from AI data center operators is currently raising production costs across the entire electronics industry. Intel Corporation has already received High NA machines to transition from solely producing its own chips to providing outsourced foundry services. The company noted that it has been able to offer potential clients the benefits brought by this technology. For three years, Intel Corporation has been contributing to advancing the shift to larger photomasks. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's renewed embrace of cutting-edge chip manufacturing tools is crucial for ASML Holding NV ADR's growth. Bloomberg-compiled data indicates that this Taiwanese company accounts for about 16% of ASML Holding NV ADR's revenue. The increasing commitments from Samsung and Intel Corporation mean that all three major clients of the Dutch company have joined this transformation camp. Peters from ASML Holding NV ADR remarked, "This is an important step for High NA in mass production. It's a crucial milestone where customers realize the advantages of these systems compared to multi-patterning strategies." Peters pointed out that as customers advance to the next generation of chip manufacturing, they anticipate a growing need for more layers using High NA technology, thus "they also recognize the opportunity to scale up photomask sizes." Lithography is the process of using light to etch patterns into materials deposited on a silicon wafer. Subsequently, these patterns are filled with other materials to form transistors and connections that give devices various functionalities (primarily data processing and storage). The industry's efforts to shrink feature sizes have forced equipment manufacturers to explore increasingly unconventional technologies. ASML Holding NV ADR's state-of-the-art machines use extreme ultraviolet light as a source, a type of light that cannot be naturally produced on Earth. The limitations brought about by the 6-inch photomask, which has been used for decades, have led to a series of compromises that, in turn, have slowed the pace of improvements to core components of AI data center computers. Unable to make individual chips larger, companies have turned to vertical stacking and complex interface layouts, increasing the complexity and cost in the manufacturing and deployment of chips.