Intel commits $4.1B to ASML's next-gen semiconductor tech research

Intel is pledging nearly $1 billion to ASML’s R&D programs to help accelerate deployment of new semiconductor manufacturing technologies.

Intel has announced that it has finalized a series of agreements with ASML, one of the world's leaders in manufacturing advanced technology systems for the semiconductor industry.

Hoping to reap the benefits from ASML's products as fast as possible, Intel has pledged a serious amount of cash to get things rolling.

Overall, Intel has promised to pay €3.3 billion ($4.1 billion) to accelerate the development of 450-millimeter wafer technology and extreme ultra-violet (EUV) lithography. But the funding will come in installments over designated phases.

In phase one, Intel committing €553 million ($680 million) to assist ASML in accelerating the development and delivery of 450-mm manufacturing tools, as well as an equity investment of €1.7 billion ($2.1 billion) for approximately 10 percent of ASML’s pre-transaction issued shares.

In phase two, which is subject to ASML shareholder approval, Intel will commit another €276 million ($340 million) in R&D funding to ASML for accelerating EUV research as well as an equity investment of €838 million ($1.0 billion) for an additional 5 percent of ASML post-transaction issued shares.

Intel senior vice president and chief operating officer Brian Krzanich emphasized in prepared remarks the importance of developing new technologies in this area quickly.

Productivity improvements driven by enhanced wafer manufacturing technologies, especially larger silicon wafers and enhanced lithography technologies with EUV are direct enablers of Moore’s Law, which delivers significant economic benefits to consumers. The transition from one wafer size to the next has historically delivered a 30 to 40 percent reduction in die cost and we expect the shift from today’s standard 300-mm wafers to larger 450-mm wafers to offer similar benefits. The faster we do this, the sooner we can gain the benefit of productivity improvements, which creates tremendous value for customers and shareholders.

Intel is planning to fund its R&D and equity investments in ASML from cash on hand at its offshore subsidiaries. Both companies expect both phases of the transaction to close after shareholder votes during the third quarter of 2012.