CHIP MAKERS IN A FRENZY – TECH

Chip makers are racing to produce smaller and faster processors.

This requires the latest manufacturing processes and new types of production tools – which don’t come cheaply.  So, there’s a spending frenzy going on with Taiwan Semiconductor Manufacturing, Intel, and Samsung to provide manufacturing systems that push the bounds of physics by using extreme ultraviolet light (EUV) to produce chip circuitry at a much thinner width than was possible with the more commonly used light sources (ref WSJ).  The EUV tools are expensive and even more so when an entire semiconductor fabrication plant has to be equipped.  As a result of this move forward in semiconductor manufacturing technology, ASMI, the largest supplier of EUV technology tools achieved a revenue of $827 million during the past seven months alone, or, about $118 million per machine.  And, that’s not all – these new systems require additional equipment for process control and testing.  As a result, the tech companies involved have begun to alert investors that they will be spending much more on capital expenditures this year – TSMC, for example, is estimating that that will be between $14 and 15 billion this year, nearly 40% above its originally stated target expenditure.  More spending by the chip makers with certainly be a boon to those who produce the new equipment – and, ultimately, probably to the chip makers, as well.  We’ll follow that process.

ALL THE MOVING PARTS – it takes the success of all the elements of a company to lead to the ultimate success of the company.

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