Samsung, ASML’s $761M facility to aid logic, memory chip innovation

As part of a government-driven semiconductor alliance between the Netherlands and South Korea, Dutch semiconductor equipment maker ASML is teaming up with Samsung to invest $761 million ($1 trillion won) in a new research and development (R&D) facility in South Korea.

The deal — which will establish ASML’s first offshore R&D center — was unveiled on a visit by South Korean President Seok-Yeol Yoon to the Veldhoven headquarters of ASML. He also met King Willem-Alexander of the Netherlands and other government officials as part of a larger plan for South Korea’s to form a “semiconductor alliance” with the Netherlands, according to a release by the Republic of Korea Office of the President.

The deal — which will establish ASML’s first offshore R&D center — was unveiled on a visit by South Korean President Seok-Yeol Yoon to the Veldhoven headquarters of ASML. He also met King Willem-Alexander of the Netherlands and other government officials as part of a larger plan for South Korea’s to form a “semiconductor alliance” with the Netherlands, according to a release by the Republic of Korea Office of the President.

As part of the deal, ASML and Samsung will set up a Next-Generation Semiconductor Manufacturing Technology R&D Center to jointly develop ultra-fine processes based on next-generation extreme ultraviolet lithography (EUV), equipment unique to ASML that’s essential for the production of advanced chips.

ASML’s primary product is lithography machines for wafer fabs, where the company earns about 95% of its  revenue, said Gaurav Gupta, VP analyst, Emerging Technologies and Trends, at Gartner Group. Within this space, EUV equipment “has been their growth engine,” with the company in “a unique position in the industry as being sole suppliers,” he said.

“For leading edge logic and memory chips to continue their advancement from a fabrication perspective, there is essentially no roadmap without the EUV tool, and hence ASML,” he said.

EUV, however, is used primarily for leading-edge logic and memory, and thus has a limited customer base of chipmakers such as Intel, Samsung, TSMC, SK Hynix and Micron. By setting up an R&D facility with Samsung in South Korea, ASML gets to cozy up to two of its biggest customers — Samsung and SK Hynix, South Korea’s No. 2 chipmaker — in a collaboration that will help them advance their products, Gupta said.

“A research lab in Korea will allow Samsung engineers and scientists to work closely with equipment vendor ASML and develop processes and recipes for next-generation nodes,” precluding the need for Samsung to place engineers in the Netherlands to collaborate on the technology, he said. “This close access would certainly help them partner and accelerate their research work,” Gupta said.

ASML did not respond immediately to request for comment”.

Competition heats up

On his visit, Yoon toured ASML’s production site of next-generation EUV lithography equipment, as well as met with a coalition of representatives from ASML, SK Hynix, Samsung and various Europe-based makers of semiconductor equipment, including the Netherlands’ ASM, Germany’s Zeiss and Belgium’s IME.

Companies in the semiconductor equipment market are facing  pressure from the US to restrict exports of advanced chips to  China, due to geopolitical rivalry and concerns that China will use the latest semiconductor technology for military and surveillance purposes.  The US is also aiming to shore up a solid domestic supply chain for semiconductors to avoid dependency on foreign products. “There is a strong sentiment to achieve domestic self-sufficiency in chip manufacturing,” Gupta observed.

Not to be outdone, foreign countries that already have a healthy semiconductor supply chain, like Taiwan, China, and South Korea, are ramping up competitively to maintain their lead, he said, and the deal between ASML and Samsung reflects that.  

“One way to ensure chip manufacturing share and relevance is to be ahead in terms of technology,” Gupta noted. “That’s where this deal is extremely relevant.”

Acknowledging the growing shortage of skilled semiconductor workers in the labor force, the Netherlands and South Korea also established the “Korea-Dutch Advanced Semiconductor Academy” as part of their collaboration.

The facility will provide field-learning opportunities to graduate students from both countries using cutting-edge semiconductor production equipment. The academy’s first training, which will feature 100 attendees from both countries, will kick off in the Netherlands in February 2024.