The world’s largest contract chip manufacturer has agreed to make a 1.1 billion euro (£875 million) investment in one of its component suppliers in a sustained bid to cut costs.
Taiwan Semiconductor Manufacturing Company (TSMC) has said it will fork over 838 million euros (£667 million) for a five per cent stake in Veldhoven, Netherlands-based ASML, and will invest another 276 million euros (£220 million) in the company to further research and development of smaller, more cost-effective chip technology.
In July, Intel announced a similar $4.1 billion (£2.6 million) agreement with ASML, which builds machines that are used to print circuit patterns onto computer chips.
The co-investment programme aims “to secure and accelerate key lithography technologies,” said ASML CEO Eric Meurice. “These technologies will benefit the entire industry and are not restricted to our co-investment partners.”
The technologies in question are related to the industry-wide goal of increasing wafer sizes from 300mm to 450mm, a move that would introduce massive cost-savings by multiplying the number of chips that can be produced from each wafer.
TSMC’s co-CEO Shang-yi Chiang said the global chip industry was wrangling with "how to effectively control the escalating wafer manufacturing cost."
The deal with ASML will hasten the emergence of future technologies that could bring costs down in the long run.
"The transition from one wafer size to the next has historically delivered a 30 to 40% reduction in die cost and we expect the shift from today's standard 300mm wafers to larger 450mm wafers to offer similar benefits," Intel CEO Brian Krzanich said after the company signed its own agreement with ASML.
The co-investment programme is also expected to push the development of ultraviolet lithography technology, a new technique for printing circuit patterns onto silicon wafers that will also help industry players cut costs by reducing chip sizes.
“The additional funding...will help secure and accelerate EUV development activities, in parallel with the necessary focus on improved performance of existing optical lithography tools,” Chiang said in a statement.