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Technology Stocks : ASML Holding NV

ASML 1,389

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3:59 PM EST

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To: niek who wrote (1114)	5/21/2006 1:05:39 PM
From: niek	Read Replies (1) of 43166

Canon needs immersion lithography platform sooner rather than later! Friday, 19 May 2006 FabTech With both Nikon and ASML having free range in demonstrating, shipping and qualifying immersion lithography tools at customer sites emphasis has been placed on who is winning the immersion tool race. Recently we highlighted that ASML has won orders from Toshiba for its immersion tools, the first time ASML has won any business from that Japanese chip manufacturer. Recently sources highlighted that the poor performance of Canon is forcing companies such as Toshiba to look at ASML as traditionally many Japanese firms have operated a dual source strategy. In the past such a dual source strategy for Japanese chip manufacturers would have meant purchasing lithography tools from both Nikon and Canon to the exclusion of ASML! In a short few years ASML has gained 7 Japanese customers but has this been to the detriment of both Nikon and Canon? It would seem from new information that the ASML win at Toshiba was at the expense of Canon rather than Nikon. A pattern that can be applied to other new business wins by ASML in that country. Nikon recently highlighted that sales are increasing, especially for leading edge tools and expects a very strong year. ASML is forecasting the same, while Canon's position is less compelling. ASML is not getting things its own way and has even had to accept that a long standing customer and single source one at that, AMD has started using Nikon's 248nm Krf tools in Fab 36 for non-critical layers. The cost conscious AMD engineers obviously saw some compelling reasons to use Nikon's tools for the first time. With Nikon and ASML competing at a higher level than Canon can, the issue becomes one of will the company produce an immersion tool with too little and too late? This is after all a technology/cost driven business and missed opportunities can often mean the end of any meaningful involvement in a market. Canon continues to plan for a launch of its completely new platform by the end of the year and much is now riding on whether it can compete significantly on both a performance and cost basis with the clear two leaders. Toshiba as well as Elpida are pushing scaling of memory devices very hard in a bid to retain and gain competitive advantages. They can't wait and are not waiting. Canon has a window on immersion that it can't afford to miss. ASML knows all about how hard and how long it is to break into a new customer and I don't necessarily refer to Japanese chip manufacturers! Intel Corp is a good example of a company that has dual sourced but at the exclusion of ASML. In days now gone SVG would handle critical layer patterning while Nikon would handle the bulk of everything else.

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