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In win for Taiwan, ASML opens chip-tool training center for TSMC

Taipei courts key foreign chip players to counter US-China tech war fallout

ASML opened its most advanced overseas training center in the southern Taiwanese city of Tainan on Aug. 20. (Photo by Cheng Ting-Fang)

TAINAN, Taiwan -- Europe's biggest chip equipment maker has opened a $16 million high-tech training facility to serve Taiwan Semiconductor Manufacturing Co., reflecting Taipei's determination to defend the island's crown jewel industry.

The center, located in the southern city of Tainan, will train engineers in the use of extreme ultraviolet (EUV) lithography machines, the industry's most cutting-edge and costliest chipmaking tools. The center is intended to better serve TSMC, ASML's biggest customer and the world's most valuable chip company.

At the opening of the center on Thursday, ASML global vice president Mark Ting said the company will continue to invest in Taiwan and plans to open a new research and development center that will nearly double its local R&D workforce to 500 within three years.

"Taiwan is currently the world's biggest installation base of the EUV systems. ... We will continue to invest here," Ting said. Total investment in the training center will come to 13.5 million euros ($16 million), he added, and hiring for the R&D center will begin next year.

The Netherlands-based company said this is its first overseas training center equipped with "live demonstration" EUV machines. ASML is the world's only supplier of such equipment, and TSMC is its biggest buyer. The European company also has an EUV training center in South Korea, but without live demo machines, to serve its other key customer, Samsung Electronics.

One set of EUV machines cost around $120 million, but major customers such as TSMC and Samsung can receive discounts. For 2020, ASML said it will ship 35 EUV systems. More than 20 of those are going to TSMC, sources familiar with the matter said.

The training center's grand opening comes as Taiwan courts investment from foreign chip equipment and materials providers. Taiwan's flagship chip industry is the world's second largest after the U.S., and the government is keen to protect that position as Beijing nurtures its own chip ambitions. China -- which views the democratically-ruled island as part of its territory -- has been aggressively hiring engineering talent away from Taiwanese companies to help build up a competitive semiconductor industry.

The goal of the Taiwanese government, a senior economic official told the Nikkei Asian Review, is to convince top foreign chipmaking equipment providers such as Applied Materials, Lam Research and ASML to increase local manufacturing capacity of their advanced production tools. Many key Japanese makers of chipmaking materials, such as Hitachi Chemical and Mitsubishi Chemical, are already increasing investment in Taiwan. Taiwan, like China, South Korea and Japan, still lags behind the U.S. in vital fields of chipmaking equipment and materials.

American's dominance in chipmaking equipment has become its ultimate weapon for throttling China's tech ambitions. Under Washington's latest crackdown on Huawei, all foreign chip suppliers serving the company must apply for licenses if their product development and production involved U.S. technologies. ASML's plan last year to ship the first advanced EUV machine to China's Semiconductor Manufacturing International Co. was also put on hold due to U.S. pressure, Nikkei first reported.

On the other hand, ASML's launch of an EUV center in Taiwan marks a win for TSMC, the world's biggest contract chipmaker. TSMC counted most of the world's leading chipmakers as customers, including Apple, Google, Huawei, Intel, Qualcomm, Broadcom, Nvidia, MediaTek and many others.

The tech industry sees EUV lithography as indispensable for further chip innovations. EUV machines can emit light with wavelengths one-fifteenth as small as the conventional chipmaking equipment, enabling it to etch finer circuits and thus squeeze more transistors onto a chip.

TSMC and Samsung are the only two chipmakers in the world that have adopted EUV for advanced chip manufacturing. TSMC uses the technology to mass-produce 5 nanometer chips, the world's most advanced semiconductors, which will be used in core processors for the upcoming 5G iPhone.

Intel has said its development of 7-nanometer chips will be delayed until as late as 2023 and is developing a "contingency plan" to outsource production of some chip products. Intel planned to adopt EUV technology for the chips.

The nanometer size refers to the line width between transistors on a chip. The smaller the size, the more cutting-edge the chips, and thus more expensive and challenging to build.

Arisa Liu, a veteran chip analyst with Taiwan Institute of Economic Research, said ASML has its eye on the future growth of TSMC, and the opening of the new center is inline with growing push by governments around the world to localize vital semiconductor supply chains.

"Chip-making equipment and materials are the two segments that Taiwan is still far insufficient over years. ... The U.S.-China tech tension and the global pandemic have triggered all the key economies to recognize the importance of localization of vital tech supply chains to ensure business continuity," Liu told Nikkei. "All these ongoing trade and tech geopolitical conflicts are all linked with the rebalancing hope for key countries such as Japan and the U.S. to bring more vital manufacturing back home, and the trend is here to stay."

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