Intel has entered into a series of agreements with ASML intended to accelerate the development of 450-millimeter (mm) wafer technology and extreme ultra-violet (EUV) lithography totaling approximately $4.1 billion. The objective is to shorten the schedule for deploying the lithography equipment supporting these technologies by as much as two years, resulting in cost savings and productivity improvements for semiconductor manufacturers.
Intel is participating in a multi-party development program that includes a cash contribution by Intel to fund relevant ASML research and development (R&D) efforts as well as equity investments in ASML. The first phase of this program consists of Intel committing to R&D funding of approximately $680 million to assist ASML in accelerating the development and delivery of 450-mm manufacturing tools, as well as an equity investment of approximately $2.1 billion for approximately 10 percent of ASML’s pre-transaction issued shares. Intel will record the R&D investment as a combination of R&D expense and pre-payments on future tool deliveries.
The second phase of the program is conditioned upon ASML shareholder approval. It includes an additional commitment by Intel of R&D funding of approximately $340 million in ASML focused on accelerating EUV, as well as an equity investment of approximately $1.0 billion for an additional 5 percent of ASML post-transaction issued shares.
Intel will then hold a total of 15 percent of ASML’s issued shares. The total equity investment will be approximately $3.1 billion. As part of these agreements, Intel is also committing to advanced purchase orders for 450-mm and EUV development and production tools from ASML.
Both phases of the program are subject to standard closing conditions, including customary regulatory approvals. The companies expect both phases of the transaction to close after the shareholder vote in the third quarter.
ASML has stated its intention to sell up to a 25 percent aggregate stake in the company (on a post-transaction basis) to Intel and other semiconductor manufacturers in this program. Intel’s ownership stake in ASML will not exceed 15 percent of ASML’s post-transaction issued shares and will be subject to lock-up and voting restrictions.
Intel intends to fund its R&D and equity investments in ASML from cash on hand at its offshore subsidiaries.