ASML is Deepening its R&D and Supply Chains in Taiwan to Grasp the Business Opportunities Derived from Taiwan’s Advanced Semiconductor Manufacturing Capabilities

As line width in semiconductor chips becomes narrower, critical manufacturing equipment — lithography machines featuring a higher degree of accuracy — will be required. Basically, the extreme ultraviolet (EUV) lithography requires a 13.5 nanometer (nm) light source, which is a great hurdle for semiconductor equipment manufacturers. There are three major lithography machine suppliers in the world today: ASML, Nikon and, Canon. ASML, as the leader in the industry with a market share of over eighty percent, is the only one with the technology to provide the most advanced EUV lithography machines, which are priced at over $100 million per unit. To conduct a manufacturing process with a 7 nm node or under, it is required to install a lithography machine that offers this degree of accuracy. Indeed, ASML is the leader in this field.

Overview of ASML’s Operations in Taiwan

In 1984, ASMI, a Dutch semiconductor equipment manufacturer, formed a joint venture with Philips to specialize in lithography machines. The new company was named ASML. It started with 30 employees and now has become a well-known multinational company. Currently, ASML employs 25,000 staff worldwide, including 14,000 at its headquarters in the Netherlands, and 2,500 in Taiwan. Most ASML employees are R&D staff, with R&D expenditures equaling 16% of total sales turnover. Besides the Netherlands, ASML also has operations in the USA, Korea, Taiwan, China, Japan, and Singapore.

Taiwan is a major manufacturing base in the world semiconductor industry, and a very important customer for ASML. To provide customer services at close proximity, ASML established its Taiwan subsidiary in 2003. At the end of 2018, ASML Taiwan relocated its head office to the Taiwan Fertilizer office building in Hsinchu City, with total space of approximately 13,200 square meters featuring European-style interior decorations. The new office provides recreation facilities, such as a gym and café with great views, designed to stimulate the creativity of everyone on staff. The main lines of business for ASML Taiwan include manufacturing, sales, training, and after-sales services for lithography machines. The company started with a total staff of less than 100, but the number is now up to 2,500, including 1,600 engineers for customer support.

ASML’s expansion of its investment in Taiwan can be traced back to its acquisition of Hermes Microvision, Inc., (HMI), which was listed on the Taipei Exchange. ASML incorporated HMI’s advanced electron beam inspection technologies into its EUV lithography machines, significantly improving the exposure accuracy of the equipment to less than 5 nm. The M&A deal also increased the total amount of ASML’s investments in Taiwan and strengthened its connections with local suppliers. ASML also established training facilities in Taiwan to serve global lithography machine users.

Mr. Mark Ting, ASML Global Vice President & Taiwan Country Manager, has described ASML’s Taiwan operations as follows: “In Taiwan, we have five operation bases – the Hsinchu Head Office, customer support offices in Linkou, Taichung and Tainan, and two manufacturers with R&D capabilities in Linkou and Tainan. The Linkou plant is responsible for machine refurbishment, design and assembly of optical measuring instrument’s modules, manufacturing of reticle SMIF pods, and a training center for ASML’s global employees and customers. As for the Tainan plant, an EUV training center was established at this site to provide customer services at close proximity, with the electron beam inspection, R&D and equipment manufacturing teams taken over from EMI.” Mr. Ting further pointed out that “Most Taiwanese engineers hold Master’s or Ph.D. degrees, with a majority in basic sciences such as physics or chemistry. They are well-trained, diligent, and highly talented.” The company website announces job opportunities whenever there are vacancies in the parent company, which provides opportunities for Taiwanese employees to work in overseas locations.

Leveraging Taiwan’s Advantages, Enlarging R&D Capacity

According to Mr. Ting: “The key factors for ASML’s expanding its investment in Taiwan could be attributed to well-established infrastructure, excellent human resources, comprehensive industrial clusters, and a high degree of complementarity between Taiwan’s machinery industry and our lithography machines.” ASML is also keen on promoting industrial and academic R&D cooperation. ASML sponsors a science literacy program, called “Taiwan Railways of Popular Science,” which is organized by the Ministry of Sciences and Technology (MOST) in collaboration with the National Cheng Kung University Dept. of Photonics. A total of 80 students majoring in photonics at National Cheng Kung University, National Chiao Tung University, National Central University, Feng Chia University, National Sun Yat-sen University, and National Dong Hwa University are taking part in the program, in which they jointly employ 3D optical projection, optical sensing, and programming simulation technologies in one project. The objective is to cultivate more photonics talent by giving the students an opportunity to apply software, projection technology, and X-box Kinect sensors to execute sandbox topography simulations.

ASML has adopted the “circular economy” idea and applies it to the company’s product design and sales strategies. The idea is to upgrade energy efficiency and optimize the utilization of natural resources and raw materials, Taiwan has good resources to upgrade ASML-made machines and their circular efficiency. General Manager of Operations in Linkou, Mr. Tony Chao, explained that “ASML also provides a refurbishment service for used machines to extend their service life. ASML will expand its R&D capacity in Taiwan to further improve the machines in the future. A new Parts Replacement Center will be located in Taiwan, thus making our country a manufacturing base for EUV components and parts, more and more of which will be manufactured in Taiwan.”

Enhancing the Local Content Rate

General Manager of Operations Mr. Tony Chao sees Asia as the manufacturing base of the world semiconductor industry, and Taiwan’s semiconductor manufacturing sector as ASML’s key customer. ASML would like to increase the local procurement rate for this type of equipment as Taiwan’s advanced manufacturing processes continue to develop. ASML has already finalized a decision to increase the local content rate of parts for the “EUV Optical Mask Transmission Module” from Taiwan.

The high-quality components and parts made in Taiwan are complementary to ASML’s advanced technologies in EUV lithography machines. ASML will work with supply chains in Taiwan to procure high quality parts from local sources.

Cooperating with Taiwan, Looking to the Future

Talking about technology cooperation and Taiwan’s investment environment, Taiwan Country Manager Mr. Mark Ting mentioned that ASML is highly concerned about Intellectual Property protection. ASML hopes Taiwan can strengthen its IP protection scheme. Moreover, there exists some room for improvements in the administrative mechanisms – for example, simplifying review and approval procedures for foreign investments. Also, given the huge size of an EUV machine, its transportation and logistics often require government assistance, such as traffic control during the transportation process. The time frame for imported goods to be stored at bonded warehouses at Taoyuan International Airport is too short, and there is a need to look for space where the stock can be stored for a longer period of time.

Finally, as the world’s leading semi-conductor machine supplier, Taiwan Country Manager Mr. Mark Ting expects ASML to continue investing in Taiwan, which will bring in more advanced technologies and talents to Taiwan. Moreover, Corporate Social Responsibility (CSR) will be a key focal point of ASML’s work in the future. The company has benefitted greatly from its presence in Taiwan, and intends to give back to Taiwan society by engaging in charitable activities and contributing to environmental protection efforts. ASML looks forward to growing together with the people of Taiwan.