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Japanese companies fight for share of EUV chip technology sector

Tokyo Electron in the mix for peripheral devices for next-generation technology

Japanese chipmaking equipment manufacturers such as Tokyo Electron and Lasertec are competing for a bigger share of the market in EUV next-generation semiconductor technology. (Screenshots from the Tokyo Electron, NuFlare Technology and Lasertec websites) 

TOKYO -- A next-generation semiconductor technology known as extreme ultraviolet lithography, or EUV, is the focus of intensifying competition among Japanese chipmaking equipment manufacturers including Tokyo Electron and Lasertec.

EUV exposure equipment, the core of the technology, is a cutting-edge chipmaking apparatus in the highly complex world of producing semiconductors that are indispensable to powering high technology products. The ongoing generational change involving technological advances in the chipmaking equipment market is worth more than 6 trillion yen ($56.5bn) annually and is naturally generating a huge impact.

Semiconductor processing capacity depends on the line width of circuits, meaning the narrower a line, the more capable the chip. The utilization of EUV enables a line width of less than 7 nanometers -- with 1 nanometer equal to one-billionth of a meter. Thus, four times the number of transistors can fit on a semiconductor with a width of 5 nanometers than on one of 10 nanometers. And EUV exposure equipment is indispensable in fitting a 5-nanometer circuit on a silicon wafer.

ASML Holding of the Netherlands dominates the market for the equipment. Major semiconductor makers began full use of it in 2019 and ASML is the sole company capable of mass-producing it.

But Japanese companies are increasing their presence in peripheral sectors as inspection equipment and light sources. Tokyo Electron has set aside the largest ever research and development outlay in the current business year to take advantage of the technology, while EUV-related orders won by Lasertec have more than doubled over the past year.

"If EUV is used widely, demand for higher-end equipment will increase," said Toshiki Kawai, president of Tokyo Electron, the world's third-largest manufacturer of chipmaking machines. The company will pour 135 billion yen ($1.25 billion) into R&D programs in fiscal 2020, which ends on March 31, 2021.

Tokyo Electron is known for its coater/developer used to coat silicon wafers with chemical liquids and develop them. It has captured the entire share of the market for mass-produced coater/developer tools applicable to EUV technology.

The company plans to spend more than 10% of this business year's consolidated sales, projected at 1.28 trillion yen, in a bid to reinforce its front-line position for the EUV technology that is now moving toward widespread use.

Lasertec, a make of inspection equipments, is greatly benefiting from the development of EUV. For example, if a photomask, which is the original plate for making electronic circuits, has a defect, then the rate of rejection in chip production increases. From July 2019 to March this year, Lasertec won 65.8 billion yen worth of orders for its EUV-applicable testing machines, up 2.2 times from a year earlier. The equipment is expected to account for two-thirds of the company's full-year orders.

Competition among Japanese companies is also taking off. In the market for devices that trace circuit patterns on photomasks with an electron beam, NuFlare Technology, a member of the Toshiba group, trails an alliance between JEOL, a Tokyo-based maker of electron microscopes, and IMS Nanofabrication of Austria. Their competition is focused on the development of a "multibeam" capable of delivering 260,000 laser beams.

Warding off a hostile takeover bid by Japan's Hoya, the world's biggest maker of glass disks for hard-disk drives, in January, Toshiba has reinforced control over NuFlare and sent an additional 25 engineers and other officials to the unit with the aim of starting the shipment of next-generation EUV-applicable tracing devices in fiscal 2020.

Gigaphoton, a subsidiary of Japanese construction machinery maker Komatsu, was one of the two biggest makers of light sources for exposure machines before the advent of EUV but has lost its way in the industry as the rival company was bought by ASML. Still, the company, based in the city of Oyama in Tochigi Prefecture, is poised for a comeback. Ahead of the planned release of next-generation EUV equipment by ASML in 2022, Gigaphoton is set to develop new illuminant parts in a bid to regain its lost market share.

Increasing competition for the production of sophisticated chips among global leaders such as Samsung Electronics and Taiwan Semiconductor Manufacturing Co. is also prodding chipmaking equipment manufacturers to step up efforts to develop EUV-applicable machines. Given growing demand for high-end chips for use in the fifth generation, or 5G, technology for cellular networks and other state-of-the-art technologies, the South Korean and Taiwanese companies are scrambling for ASML-made exposure machines priced at more than 20 billion yen each.

The growing competition is also creating new business opportunities for other manufacturers of products used in chipmaking.

Japanese-made semiconductor production equipment has maintained a global market share of around 30% over the past two decades, standing at 31.3% in 2019, according to international industry association SEMI and the Semiconductor Equipment Association of Japan.

Nikon and Canon once dominated the global market for exposure machines but pulled the plug on development of EUV equipment after losing out to ASML.

A winner-take-all trend is getting stronger in the chipmaking equipment industry, which is also beset with increasing challenges in the manufacturing process. The change of generation, triggered by EUV technology, will accelerate a paring down of the number of chipmaking equipment manufacturers.

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