Samsung Invests $976 Million in ASML for Tech to Build Smaller Chips

Following Intel and contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung Electronics will invest ¬779 million (US$976 million) in the Dutch chip manufacturing equipment maker ASML to further development of next-generation lithography technology that should enable faster and more power-efficient chips.

Samsung is investing ¬276 million in ASML's research and development program and will also take a three percent equity stake in the company for ¬503 million, ASML said in a news release.

ASML is one of the world's largest providers of tools used for chip manufacturing and provides equipment to Samsung as well as Intel, TSMC and GlobalFoundries. 

Intel was the first company to join ASML's Customer Co-Investment Program for Innovation, investing ¬1.7 billion for a 10 percent stake in ASML in July. It also committed ¬838 million to advance the use of 450-millimeter wafer and extreme ultra-violet (EUV) lithography, which will help semiconductor companies scale down chip sizes and reduce production costs.

Developing EUV lithography will eventually enable smarter, more powerful, more energy-efficient and cheaper electronic devices for consumers, said ASML.

TSMC followed Intel at the beginning of August, taking a 5 percent equity stake in the company for ¬838 million and investing ¬276 million in ASML's EUV research. Samsung's commitment brings the funding of ASML's research and development program to its target of ¬1.38 billion. ASML does not plan to solicit the participation of additional customers, it said.

Samsung's investment in ASML "makes perfect sense," said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy. "Samsung cannot afford to lag behind Intel and TSMC," he said.

"This is also very good for ASML," he added, as the investments will prompt other chip manufacturers' interest in the company's technology.

The way ASML decided to attract investors and sell a minority stake in the company is a novel approach in the industry, said Moorhead, who added that he couldn't remember the last time that "three-quarter" of the semiconductor industry bought stakes in the same company. "It shows that even companies like Intel cannot invent everything on their own," he said.

Intel is the biggest chip manufacturer in the world.

There are rumors floating around that Apple, which buys chips from Samsung, is looking for a new provider, said Moorhead. But he did not expect that Samsung's investments in ASML would speed up any decisions from the iPhone maker. "It is probably good for Apple in the long term if they stick with Samsung," he said, adding that sticking with Samsung would allow Apple to benefit from the new technology.

It would also be hard for Apple to change chip providers, said Moorhead. TSMC would be the most logical choice, but that might not be a good decision at the moment because the company has recently had problems meeting demand, he said.

Samsung did not immediately respond to a request for comment.

Loek covers all things tech for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com