ASML considers acquisitions
By Ian Bickerton in Veldhoven
Published: March 7 2006 02:00
ASML is considering expansion into semiconductor manufacturing and weighing acquisitions, including the option of buying a cluster of technology companies, its chief executive said yesterday.
Eric Meurice, head of the world's biggest supplier of equipment for semiconductor manufacturers, also told the Financial Times that the company was all but certain to buy back shares this year. He disclosed it had begun the process of establishing a manufacturing and research and development hub in Asia.
Referring to a January announcement that the launch of a share repurchase programme was subject to a decision on investment opportunities, Mr Meurice said: "Our shares are at a good level and we have access to cash and capital markets [for acquisitions] so there is no need to sit on the cash pile. So yes, we will buy back."
There are four proposals under consideration to branch into areas of the chip manufacturing process closely linked to its lithography activities.
ASML would remain focused by choosing activities that would yield synergies, and would resist analyst pressure to become a "multi-headed monster".
"All the big [industry] leaders start with one purpose," he said, citing Dell, the computer company, and Intel, the world'slargest chipmaker - both of which are former employers of his.
Mr Meurice said buying a cluster of technology companies was attractive because it would address issues encountered during the production process. However, no decisions would be rushed.
The background to the deliberations is the insatiable appetite of the semiconductor industry to work in increasingly microscopic dimensions, allowing more data to be loaded onchips or the production of smaller chips and more powerful or cheaper products.
ASML must continually update production techniques to maintain the forensic accuracy necessary to manufacture components at dimensions thousands of times thinner than a human hair.
ASML's latest innovation, immersion, uses a water-based process to shrink the dimensions of circuits. Analysts estimate the fledgling immersion market will be worth $4.3bn by 2010 or 40 per cent of the total lithography market.
ASML is also taking measures to iron out the effects of sector volatility, with the latest scheme being aflexible working schedule that means staff worklonger hours at times ofhigh demand and fewer hours in low points in the cycle.
By "squeezing manufacturing inefficiencies" ASML expects to cut by up to 20 per cent the six-month cycle from order to shipment, Mr Meurice said.
The company has fretted over whether to establish an Asian hub.
While 83 per cent of ASML customers are based in the area, its suppliers are mostly European, hence its manufacturing and research facilities are at Veldhoven, in the Netherlands.
Furthermore, the length of time it takes ASML to train technicians to a level where they understand its complex processes, and can contribute to innovation, would largely negate the cost benefits of a cheaper workforce, Mr Meurice said.
Ultimately it had chosen to go ahead not for cost reasons but because of "the need for every global company to learn from different places and obtain the best performance".
Between 300 and 500 staff will spend two to three years in customer support roles before migrating to research and manufacturing functions over three to seven years.
The intention is "to build a critical mass of skill sets which will be a brewing base to eventually [allow us to] put a big part of our R&D activities in Asia", Mr Meurice said.
The facility will be in addition to R&D activities in the Netherlands, where ASML employs 1,200 staff in research. It plans to hire up to 200 more technicians in the Netherlands this year.
ASML's Asian build-up and technological leadership had paid off in Japan, home of its two main rivals Nikon and Canon.
It has signed six customers and is developing "like a snowball", said Mr Meurice.
Globally, the Dutch company claims more than half the lithography market by value.
The average price of systems on order rose to a record €5.1m ($6.12bn) in the fourth quarter. |
