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$ASML is a US$260 billion company today.
But it is far from an overnight success.
The company's key product, the EUV system, took almost 20 years to develop; it took a village to get it done, every step of the way. 🧵
But it is far from an overnight success.
The company's key product, the EUV system, took almost 20 years to develop; it took a village to get it done, every step of the way. 🧵
1/23
1997 to 2010: from concept to prototype
The idea behind EUV was conceptualised in the mid-1980s.
But it wasn’t until 1997 when ASML launched its EUV program by hiring Jos Benschop (Senior VP of Technology) to lead the charge.
1997 to 2010: from concept to prototype
The idea behind EUV was conceptualised in the mid-1980s.
But it wasn’t until 1997 when ASML launched its EUV program by hiring Jos Benschop (Senior VP of Technology) to lead the charge.
2/23
At the time, it was a bold bet for $ASML to make for three reasons:
1. $ASML had only become an independent public company two years prior to the EUV program, in 1995, with a single profitable product, its PAS 5500.
At the time, it was a bold bet for $ASML to make for three reasons:
1. $ASML had only become an independent public company two years prior to the EUV program, in 1995, with a single profitable product, its PAS 5500.
3/23 cont'd
2. There were other competing technologies such as electron beam lithography and ion beam lithography available — however, $ASML decided to place an “educated bet” on EUV.
2. There were other competing technologies such as electron beam lithography and ion beam lithography available — however, $ASML decided to place an “educated bet” on EUV.
4/23 cont'd
3. Despite being conceptualised in the mid-1980s, there were far more sceptics than supporters of EUV from the industry and researchers a decade later.
3. Despite being conceptualised in the mid-1980s, there were far more sceptics than supporters of EUV from the industry and researchers a decade later.
5/23
$AMSL's Benschop helped form a European industrial R&D consortium in 1998, dubbed EUCLIDES (EUV Concept Lithography Development System), bringing together its long-standing partner Carl ZEISS, Oxford Instruments and other suppliers.
$AMSL's Benschop helped form a European industrial R&D consortium in 1998, dubbed EUCLIDES (EUV Concept Lithography Development System), bringing together its long-standing partner Carl ZEISS, Oxford Instruments and other suppliers.
6/23
$ASML EUCLIDES would join hands with a US-based EUV consortium before presenting its initial findings in 2000.
The early days of development were, by no means, easy.
$ASML EUCLIDES would join hands with a US-based EUV consortium before presenting its initial findings in 2000.
The early days of development were, by no means, easy.
7/23
As $ASML was developing the EUV, bear in mind:
1. The dot-com bubble burst at the turn of the century with semiconductor wafer shipments collapsing by almost a third in 2001.
As $ASML was developing the EUV, bear in mind:
1. The dot-com bubble burst at the turn of the century with semiconductor wafer shipments collapsing by almost a third in 2001.
8/23 cont'd
2. ASML experienced a sharp 41% decline in revenue in 2001, and subsequently, recorded huge losses totalling nearly €850 million between 2001 and 2003.
2. ASML experienced a sharp 41% decline in revenue in 2001, and subsequently, recorded huge losses totalling nearly €850 million between 2001 and 2003.
9/23 cont'd
3. Under these circumstances, it would have been easy for any semiconductor equipment manufacturer to cut down on project commitments, especially the ones with uncertain pay-offs.
The EUV project, in this context, would be a prime example.
3. Under these circumstances, it would have been easy for any semiconductor equipment manufacturer to cut down on project commitments, especially the ones with uncertain pay-offs.
The EUV project, in this context, would be a prime example.
10/23
To its credit, $ASML persisted.
A small team was formed in 2001 to build a prototype EUV system.
This process took five years before its first demo tool was delivered in 2006 to two research institutes for proof of concept.
To its credit, $ASML persisted.
A small team was formed in 2001 to build a prototype EUV system.
This process took five years before its first demo tool was delivered in 2006 to two research institutes for proof of concept.
11/23 Then, the GFC struck:
1. Between 2007 and 2009, $ASML’s revenue collapsed by almost 58%, culminating in a €151 million loss in 2009.
2. At this stage, the EUV system was still a concept with no line of sight to monetisation after 12 years of investment.
1. Between 2007 and 2009, $ASML’s revenue collapsed by almost 58%, culminating in a €151 million loss in 2009.
2. At this stage, the EUV system was still a concept with no line of sight to monetisation after 12 years of investment.
12/23
3. Again, it would have been easier to throw in the towel than persist.
But $ASML persisted, opening new cleanrooms and workspaces in 2009 to aid EUV development and production.
3. Again, it would have been easier to throw in the towel than persist.
But $ASML persisted, opening new cleanrooms and workspaces in 2009 to aid EUV development and production.
13/23
From its effort, the first TWINSCAN NXE:3100 pre-production EUV system was delivered to a Samsung research facility in 2010.
The delivery of the system was a pivotal moment, but the challenges were far from over.
From its effort, the first TWINSCAN NXE:3100 pre-production EUV system was delivered to a Samsung research facility in 2010.
The delivery of the system was a pivotal moment, but the challenges were far from over.
14/23
2010 to present: from research to mass production
By 2012, $ASML was at a point where it had demonstrated that its EUV system could print the chip features needed.
Even then, the product was nowhere near ready for mass production.
2010 to present: from research to mass production
By 2012, $ASML was at a point where it had demonstrated that its EUV system could print the chip features needed.
Even then, the product was nowhere near ready for mass production.
15/23
At this point, $ASML needed billions to accelerate the transition from its research phase to manufacturing high-volume chip manufacturing systems capable of withstanding continuous manufacturing 24/7 required by its customers.
At this point, $ASML needed billions to accelerate the transition from its research phase to manufacturing high-volume chip manufacturing systems capable of withstanding continuous manufacturing 24/7 required by its customers.
16/23
Enter the customer co-investment program (CCIP):
1. In 2012, $ASML partnered with its key customers, Intel, TSMC, and Samsung to fund the development of the EUV process.
2. The trio took a 15%, 5% and 3% stake in ASML, respectively, for €3.85 billion.
Enter the customer co-investment program (CCIP):
1. In 2012, $ASML partnered with its key customers, Intel, TSMC, and Samsung to fund the development of the EUV process.
2. The trio took a 15%, 5% and 3% stake in ASML, respectively, for €3.85 billion.
17/23
3. In addition, the participants agreed to fund $ASML's research and development to the tune of €1.38 billion between 2013 and 2017.
3. In addition, the participants agreed to fund $ASML's research and development to the tune of €1.38 billion between 2013 and 2017.
18/23
The huge injection in funds enabled $ASML to acquire critical technology providers such as lithography light source provider Cymer for a hefty €1.95 billion in 2013 and a 24.9% stake in Carl Zeiss in 2017 for €1 billion.
The huge injection in funds enabled $ASML to acquire critical technology providers such as lithography light source provider Cymer for a hefty €1.95 billion in 2013 and a 24.9% stake in Carl Zeiss in 2017 for €1 billion.
19/23
For its part, $ASML continued to iterate, delivering its second-generation EUV system (NXE: 3300) in 2013, followed by its third generation (NXE: 3500) in 2015.
For its part, $ASML continued to iterate, delivering its second-generation EUV system (NXE: 3300) in 2013, followed by its third generation (NXE: 3500) in 2015.
20/23
Finally, 19 years after the start of its program, ASML’s EUV program reached a turning point in 2016.
Customers placed a significant number of orders for its first production-ready NXE:3400 system, leading to a EUV system backlog of €2 billion.
Finally, 19 years after the start of its program, ASML’s EUV program reached a turning point in 2016.
Customers placed a significant number of orders for its first production-ready NXE:3400 system, leading to a EUV system backlog of €2 billion.
21/23
Orders gradually ramped over the next six years.
Orders gradually ramped over the next six years.
22/23
$ASML steadily ramped up its EUV system deliveries by 10 times over the next six years, increasing from a mere four systems in 2016 to 40 systems in FY2022.
$ASML steadily ramped up its EUV system deliveries by 10 times over the next six years, increasing from a mere four systems in 2016 to 40 systems in FY2022.
23/23 Present day
To signify EUV’s rise to prominence: since its introduction, the number of wafers produced using its EUV systems has exceeded 111 million at the end of FY2022.
Ergo, why $ASML is worth US$260 billion today.
To signify EUV’s rise to prominence: since its introduction, the number of wafers produced using its EUV systems has exceeded 111 million at the end of FY2022.
Ergo, why $ASML is worth US$260 billion today.
That's a wrap!
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