As the world's largest semiconductor lithography system supplier, ASML is also the world's only extreme ultraviolet lithography (EUV) machine supplier. EUV lithography systems are also considered one of the most advanced chip manufacturing tools at present, allowing chip manufacturers to gain an advantage in advanced process chip manufacturing of 7nm and below, and enable Moore's Law to be continued.
ASML's monopoly position
ASML is the world's leading supplier of semiconductor lithography systems. Every major semiconductor manufacturing company uses ASML's lithography machine to manufacture chips. To be precise, ASML has more than 90% of the market share in in the semiconductor lithography market, and the remaining players are Canon and Nikon. At the same time, ASML is also a monopoly in the EUV lithography machine market with a unit price of over 100 million US dollars.
According to the financial report, ASML's sales in the third quarter of 2021 were 5.241 billion euros, and increased by 32.4% year-on-year; net profit was 1.74 billion euros, a year-on-year increase of 63.8%. The amount of new orders in the third quarter was 6.179 billion euros, and among these new orders of 6.179 billion euros, the order amount of EUV lithography machines accounted for nearly half, reaching 2.9 billion euros.
ASML also stated that in the third quarter, the shipments and revenue of EUV lithography machine systems hit record highs. At present, ASML's main EUV lithography machine is TWINSCAN NXE:3600D, which has also achieved a record efficiency of processing 160 wafers per hour for customers. In addition, in terms of DUV (deep ultraviolet) lithography machines, ASML has completed the shipment of 1,000 ArF systems (argon fluoride immersion lithography systems).
Looking ahead, ASML expects to achieve an increase of about 35% in 2021, with net sales in the fourth quarter in the range of 4.9-5.2 billion euros, with a gross profit margin of 51%-52%; R&D costs are about 670 million euros, and sales and management costs are about 195 million euros.
In comparison, ASML's competitors in the field of lithography, Canon and Nikon's lithography machine business scale is far from ASML.
data shows that the total global sales of lithography machines in 2020 was 413 units. Among them, 258 units sold by ASML accounted for 62%, 122 units sold by Canon accounted for 30%, and 33 units sold by Nikon accounted for 8%. According to sales, ASML's share is as high as 91%, Canon only has 3%, and Nikon only has 6%.
Advanced Process Investment is growing rapidly, EUV system adoption rate continues to rise
At present, with the continuous upgrade and iteration of PC and smartphone products, and the rapid growth of demand for artificial intelligence , 5G communication, autonomous driving, cloud services, etc., the global demand for advanced process chips is growing rapidly. Competition among leading advanced process chip manufacturers such as TSMC, , Samsung , , Intel , etc. is also intensifying.
Previously, TSMC, the world's largest wafer foundry, has invested US$12 billion to start building a new 5nm wafer factory in the United States. Capital expenditure also rose to $28 billion this year and announced it will reach a record $100 billion in the next three years. TSMC said this capital expenditure is not targeting the current chip shortage, but a long-term investment aimed at taking advantage of the expected growth in demand for advanced chips in the coming years.
As the world's second largest semiconductor manufacturer, Samsung's capital expenditure on storage and foundry related businesses will also reach nearly US$30 billion this year. In addition, Samsung also announced that it will invest $17 billion to build a new advanced process wafer factory in Texas, USA. In the next three years, Samsung plans to invest up to 240 trillion Korean won (equivalent to US$205 billion) in its Samsung Electronics and other affiliated companies to consolidate its future growth engine and expand its technological leadership in the post-epidemic era. Intel, a major processor manufacturer of
, has also significantly increased its investment in semiconductor manufacturing starting this year. In March this year, after Intel's new CEO Kissinger took office, he launched the IDM 2.0 plan, which not only accelerated the advancement of its own more advanced semiconductor process, but also restarted its foundry business and announced an investment of US$20 billion to build two new wafer factories in the United States.In September this year, Intel also announced that it will invest 80 billion euros in Europe in the next 10 years to build at least two advanced wafer fabs.
As leading wafer manufacturers such as TSMC, Samsung, and Intel pursue the advanced process technology , the demand for EUV lithography machines has increased rapidly.
For example, TSMC has committed $28 billion this year, with about 80% of which will be used in the company's most advanced chip manufacturing processes - 7nm, 5nm and 3nm. The second-generation 7nm and subsequent 5nm advanced processes are based on EUV processes.
As the world's first company to use ASML EUV lithography machines for mass production, TSMC claims that it has more than 50% of the world's installation volume of EUV lithography system and 60% of the cumulative EUV wafer production volume.
Source: Anandtech
TSMC plans to continue to maintain its leading position in the number of EUV lithography machines, and its "at least" 13 EUV lithography machines that have placed orders will be delivered this year. With its aggressive capital expenditure plan, TSMC appears to continue to maintain its EUV capacity lead, while other chip makers are also struggling to catch up.
One of the ones that is struggling to catch up is Samsung, which currently lags behind TSMC in terms of EUV lithography machine installations. According to industry officials, Samsung only owns half of TSMC's number.
Currently, Samsung is using EUV lithography machines to manufacture some DRAM and 7nm/5nm logic chips. With its EUV experience in foundry, Samsung was the first to use EUV for DRAM production on the 1z node in August 2020. As Samsung expands its use of EUV lithography machines in logic processes and DRAM manufacturing, the purchase of EUV lithography machines will continue to increase in the next few years.
Intel is also deploying EUV systems for its 7nm node production chips, and is expected to further increase ASML's EUV lithography machine orders in the next few years.
At the same time, DRAM giants SK Hynix and Micron also plan to use EUV lithography machines in mass production. SK Hynix began mass production of 8 Gb LPDDR4 mobile DRAM based on 1a node in July this year. In July this year, Micron raised its capital expenditure guidance for in fiscal 2021 from $9 billion to $9.5 billion due to EUV facility investment advance payments.
In the next few years, with the increase in demand for high-end chips (such as 5G smartphone chips, high-performance computing chips, and advanced DRAM), the penetration rate of EUV lithography machines will continue to increase, and ASML will become the main beneficiary of the semiconductor upgrade cycle.
According to the forecast by Mizuho, Japan, the EUV portion of capital expenditure of major logic manufacturers will rise to 13% and 15% respectively in 2022 and 2023.
However, ASML's annual production capacity is only more than 50 EUV lithography systems, and its EUV lithography machines have always been in short supply. It is understood that last year alone, Samsung ordered 20 ASML EUV lithography machines to realize its plan to mass-produce 3nm chips in the first half of 2022. Previously, Samsung Vice President Lee Jae-yong also flew to ASML headquarters in person to urge it to speed up the delivery of EUV lithography machines. This also highlights AMSL's monopoly position in the field of EUV lithography. The key to the battle for
2nm: ASML's new generation EUV lithography machine
Since the extreme ultraviolet light wavelength (13nm) used in the EUV lithography system is significantly reduced compared to the DUV immersion lithography system (193nm), the multi-pattern DUV step can be replaced by a single exposure EUV step. It can help chip manufacturers continue to advance to more advanced process processes 7nm and below, while further improving efficiency and reducing exposure costs.
Since ASML's first mass-produced EUV lithography machine was officially launched in 2017, Samsung's 7nm/5nm process, TSMC's second-generation 7nm process and 5nm process, and even the future 3nm process are all supported by ASML's NXE:3XXX series EUV lithography machines.
At present, leading wafer manufacturers such as TSMC, Samsung, and Intel are also vigorously investing in more advanced 3nm and 2nm technologies to meet the advanced chip needs of high-performance computing and 5G communications. The implementation of the 2nm process requires the reliance on ASML's new generation of EXE:5000 series EUV lithography machines.
compared with the first generation of EUV lithography machines (NXE:3XXX series), the NA (numerical aperture) of the objective lens of the new generation of EUV lithography machines will be increased from 0.33 to 0.55, allowing chip manufacturers to produce chips with more advanced processes of 2nm and below, and have lower graphics exposure and higher production efficiency.
It is understood that the new generation of EUV lithography machines is about the size of a bus, and the entire machine contains 100,000 parts and a 2-kilometer-long cable. Each machine requires 40 containers, 3 cargo planes or 20 trucks to ship. The cost is also higher than the first generation of EUV lithography machines, reaching 3.186$300 million. The prototype of the new generation EUV lithography machine of
ASML will be tested in 2022 and is expected to be put into operation in 2023.
Samsung announced in early October that it will mass-produce the 3nm process in the first half of 2022, and plans to take the lead in mass-producing TSMC for 2nm in 2025. However, TSMC responded at a recent legal meeting that in 2025, TSMC's 2nm process will be the most advanced technology, regardless of density or efficiency.
It is worth noting that at the "Intel Accelerated Innovation: Online Launch Conference on Process Technology and Packaging Technology" at the end of July this year, Intel announced that it will mass-produce the 20A process (equivalent to TSMC's 2nm process) in 2024, and revealed that it is expected to be the first in the industry's first High-NA EUV lithography machine (i.e. ASML's new generation EUV lithography machine), and will also be the industry's first manufacturer to apply ASML's new generation High-NA EUV lithography machine to the mass production process.
Obviously, the first acquisition of ASML's new generation EUV lithography machine is also the key to Intel's determination that its process technology can surpass TSMC and Samsung to return to its leading position.
mature process production capacity continues to grow, DUV lithography system demand is strong
For many years, the semiconductor industry has been booming, and chip manufacturers have been increasing the utilization rate of production capacity in the past two years. Especially since the global wafer production capacity was short of global wafer production capacity in the second half of last year, the capacity utilization of major wafer manufacturers has been continuously increasing.
TSMC said in a letter to customers that the company's fab capacity utilization rate has exceeded 100%, but market demand still exceeds supply. Although chip manufacturers have all increased capacity utilization and software upgrades to increase short-term output, global fabs will have to expand or build new fabs to increase production capacity to meet the growth of chip demand, which alone cannot be met by increasing utilization.
. Among the shortage of wafer manufacturing capacity in this round, especially mature process capacity of 28nm and above is the most in short supply. It includes a large number of automotive chips based on mature processes, MCU, power devices (MOSFET, IGBTh, etc.), power management chip , sensors, display driver chips, CIS, WiFi and Bluetooth chips, etc. This comes from the electric car market, which accounts for a considerable part of the demand for various automotive chips.
Gartner estimates that the average semiconductor content per vehicle will rise from $489 in 2020 to $719 in 2025, and demand for automotive semiconductor revenue will grow from $38.7 billion to $75.5 billion in 2020-2025 at a CAGR of 14% from $38.7 billion to $75.5 billion, surpassing growth in other key demand areas. The entire semiconductor market, such as smartphones (7% CAGR), consumer electronics (7% CAGR), PC (0% CAGR), and the entire semiconductor industry (7% CAGR).
According to Gartner's forecast, in the incremental demand of US$37 billion, mature process nodes will account for 67% of the incremental demand for automobile semi-finished products, or US$25 billion.
At the beginning of this year, in order to solve the shortage of automotive chips, the European and American governments even asked TSMC to give priority to the production of automotive chips for automotive manufacturers. According to TSMC data, its automotive MCU output this year will increase by 60% compared with last year.
In addition, in order to meet the strong market demand for mature processes, in April this year, TSMC announced that it would invest US$2.887 billion in capital expenditure to expand the mature process, and is expected to build a 28nm mature process production capacity of 40,000 pieces per month in the Nanjing factory.
Recently, TSMC also announced that it will build a new 22/28nm mature process wafer factory in Japan, with a total investment of RMB 45.4 billion, of which the Japanese government may provide half of the subsidies. TSMC also said the fab's investment is not included in the $100 billion capital expenditure over the next three years.
In early March this year, GSK announced that it will invest US$1.4 billion this year to expand production in three wafer factories in the United States, Singapore and Germany. And 1/3 of the investment of this 1.4 billion US dollar comes from customers. In June, GF announced further increasing its investment in capacity expansion to US$6 billion, of which US$4 billion will be used to build a new wafer fab in Singapore, which is scheduled to start in 2023. The remaining $2 billion will be invested in the expansion of factories in Germany and the United States respectively. Then in July, GF officially announced that it would build a new factory in its campus in Malta, New York, USA, and will invest $1 billion to expand the production capacity of the existing Fab 8 wafer fab. After the production expansion is completed, an annual production capacity of 150,000 wafers will be added.
In May this year, the mature process technology wafer foundry manufacturer UDian also announced an investment of NT$1,000 billion (US$3.6 billion) to expand the 28nm production capacity of the 12-inch factory Fab 12A P6 factory in Tainan Science Park, and is expected to increase by 27,000 pieces each month.
According to SEMI, 29 wafer factories will start construction in 2021 and 2022, of which 15 are foundries with a monthly production capacity of 30,000 to 220,000 pieces as 8-inch wafers; 4 are storage wafer factories, which can manufacture 100,000 to 400,000 to 8-inch wafers per month. Among these newly built fabs, mature processes account for the majority of the share.
, and the manufacturing of mature process chips mainly relies on DUV lithography machines. In the face of the continuous chip shortage, the demand for DUV lithography machines has surged. As a lithography machine manufacturer that accounts for 90% of the global market share, ASML will naturally become one of the biggest beneficiaries of this mature process expansion wave.
summary:
Currently ASML is in a "sweet spot", and a leading logic semiconductor and DRAM manufacturer is transitioning from DUV to EUV process. Before completing this transition, demand for EUV lithography machines will grow in the long term as an important part of front-end semi-equipment spending. At the same time, the significant expansion of mature process production capacity will continue to drive the growth of demand for ASML DUV lithography machines.
In addition, ASML can now have a monopoly position in the field of EUV lithography. In addition to spending decades and tens of billions of dollars in research and development, it also benefits from the continued strong support of leading wafer fabs such as TSMC, Samsung, and Intel over the years. And in the foreseeable future, there is probably no competitor that can threaten ASML's nearly monopoly position. As chips become more and more advanced, the share of the chip manufacturing market will be increasingly concentrated in the hands of a few companies that can continue to maintain high capital expenditures to remain competitive in the rapidly developing semiconductor technology.
Editor: Xinzhixun-Langkejian Translated from: pynk.io, techspot.com
