When studying the global semiconductor equipment industry, it is difficult to ignore such three strange companies-ASML, ASMI and ASMPT, whose names all contain ASM and are all listed companies, and the first two are headquartered in the Netherlands.

In 2018, there were foreign media reports that TCL wanted to buy a stake in the Dutch ASMI subsidiary for $1 billion. At that time, onlookers mistakenly thought that TCL was going to enter the field of lithography (ASML), which shows how similar the two are.

In fact, there is a connection between the three companies, and the relationship is quite deep, and before we start to talk about it, the following simple diagram may make it easier for you to understand.

It is not difficult to find that there are inextricably linked relationships among the three companies. The root cause, we have to start with a person, this person is ASMI's founder and former CEO Arthur del Prado.

Origin

In the description of the official website, Arthur is a legendary figure in the industry, playing a fundamental and founding role in the semiconductor industry. In the eyes of many followers, he is the father of the European equipment industry.

Jorijn van Duijn is a doctoral student who has studied ASMI for many years. In one of his reports, we see a different Arthur. Jorijn points out that Arthur's career origins and the resulting ASM International's roots are in the burgeoning Silicon Valley.

Arthur was born in Batavia, Indonesia in 1931. Since the late 1940s, many Dutch citizens began to emigrate, and the young Arthur joined the famous Harvard Business School, but he did not get a degree. In the late 1950s, Arthur moved to California, where everything inspired him to start a business.

In 1957, earth-shaking changes took place in Silicon Valley, involving some of the most outstanding entrepreneurs of the 20th century. Including William Shockley, the co-inventor of the transistor, and eight engineers, including Robert Noyce and Gordon Moore, who left Shockley's company, who (nicknamed "eight Rebels" by Shockley) later created Intel Corp and National Semiconductor of the United States.

There is also an important person, Dean Knapic. In December 1957, Dean Knapic left Shockley Semiconductor Lab to start his own business and founded Knapic Electro-Physics, a company through which semiconductor manufacturers could buy state-of-the-art silicon without having to invest in new operations and be familiar with crystal manufacturing processes. Knapic Electro-Physics, a leading manufacturer of commercial semiconductor materials, laid the foundation for ASMI.

Arthur became acquainted with Dean Knapic after he founded the company and maintained a very friendly relationship. After that, as Knapic Electro-Physics 's "European Market Manager", he went to the Netherlands to explore the Dutch and Western European markets.

Arthur recalled, "when I came back to the Netherlands on June 28, 1958, I had silicon in one hand and $500 in the other. "
And this is the beginning of his outstanding career in semiconductor technology.

In 1964, Arthur founded ASM International (ASMI) in Bilthoven, the Netherlands, and in 1971, ASMI began to produce the first vapor deposition furnaces. In 1981, ASMI became the first Dutch company to make an initial public offering on NASDAQ. A year later, it became the first Dutch company to set up a wholly owned subsidiary in Japan. In 1999, ASMI acquired the Finnish company Microchemistry;2004, and ASMI acquired the Korean company Genitech, consolidating its pioneering position in the field of atomic layer deposition (ALD).

In 1974, Arthur acquired a controlling stake in Fico Toolings, a material manufacturer used in the semiconductor packaging industry. And renamed it ASM Fico, which opens the way to new and larger markets outside Western Europe.

ASM Fico's products are used for packaging and assembly of semiconductor devices. Since the 1960s, this part of the industry has usually been located in Southeast Asia. Seeing this trend, Arthur opened the Asian ASM in Hong Kong in 1975. Initially, the office sold ASM Fico products, but over time it developed its own production capacity. In 1988, these production activities were publicly listed as ASM Pacific Technology (ASMPT). At present, the company has grown into the world's largest supplier of semiconductor assembly and packaging technology.

In 1984, Philips and ASMI formed a joint venture. In a report by VLSI research, it was mentioned that Arthur played a key role in the creation of ASML. At that time, Philips planned to shut down the lithography equipment research and development team due to high costs, technical problems and other reasons. At this time, Arthur came to ask for cooperation in the development and production of lithography machines. Unable to stand the soft and hard bubbles of Arthur, Philips agreed with Advanced Semiconductor Materials B.V. Co-founded Advanced Semiconductor Material Lithography Holding N.V. (ASML) in April 1984.

By the mid-1980s, ASM's portfolio covered almost all major semiconductor production technologies: deposition furnaces, lithography, ion implantation, chip and wire bonding machines, and various packaging technologies. Today, all three companies are well-known semiconductor companies in the industry.

ASM three Musketeers

• ASML

The first is the most famous ASML. ASML mainly provides lithography machines and related services to semiconductor manufacturers, and is currently the only manufacturer capable of producing 7nm process chip lithography machines.

How difficult the lithography machine is, some answer may explain a little bit.

Mr. Xu of LED in Shenzhen said that an M engineer pointed out that it takes decades for a part of a lithography machine to be adjusted. Almost all the parts of the lithography machine are customized, 90% use the world's most advanced processing technology, and even some interfaces have to be polished by engineers with high-precision machinery, and the number of size adjustments may be as high as one million times.

In the past, there were only three manufacturers in the world that could mass produce high-end lithography machines, ASML of the Netherlands, Nikon and Canon of Japan, but Nikon and Canon were basically stagnant due to the large investment in the research and development of the new generation of lithography machines. At present, according to the statistics of Core thought Research Institute, ASML accounts for nearly 70% of the global market, and the technical level of ASML represents the world's top technical level.

According to Bloomberg data, ASML accounts for more than 80 per cent of the market share of high-end lithography equipment below 45nm, and ASML is the exclusive producer in the field of extreme ultraviolet (EUV), achieving a global monopoly. On July 24, 2019, ASML shares hit an all-time high of $234.5.

ASML sold 229 lithography machines in 2019, of which only 26 were EUV devices, but revenue accounted for 1x3 of total revenue. The company expects that proportion to rise to 3/4 by 2025 as other chipmakers upgrade their existing "deep ultraviolet" technology.

Since neither Canon nor Nikon have caught up with ASML in EUV technology, investors have concluded that ASML will enjoy a nanometer monopoly for some time. Since 2010, the company's market capitalization has increased tenfold to about 114 billion (see chart). Last year alone, that number almost doubled. ASML's market capitalization exceeds that of Airbus, Siemens and Volkswagen.

Intel Corp, Samsung and Taiwan Semiconductor Manufacturing Co Ltd all funded research and development of ASML, one of several hundred companies that supply chipmakers, in exchange for shares in the company. It is not only customers and investors who affirm ASML's dominance, but also politicians. EUV lithography technology is included in Wassenaar's "dual-use" technology list.

As for ASMI and ASMPT, it is understood that ASMI and ASMPT currently operate independently. The only relationship between the two is that ASMI is the largest shareholder in ASMPT, with the former holding 25 per cent of the latter.

Semiconductor manufacturing is divided into the front process and the latter process. The first process is mainly to design and fabricate integrated circuits on silicon wafers and other media, while the latter process is mainly to split wafers, packaging, testing and so on. ASMI focuses on the previous process, while ASMPT focuses on the latter.

• ASMPT

ASMPT is mainly involved in the latter stage of the process, providing semiconductor manufacturers with packaging and testing equipment and materials, and is the world's largest supplier of semiconductor component integration and packaging equipment.

The company's three main businesses include: 1, the post-process equipment division is engaged in the development, production and sales of post-process equipment, its products include welding machines, light-emitting diode (LED) equipment and test processors; 2, surface mount technology solutions division provides surface mount technology-related solutions; 3, materials division is engaged in lead frame business.

In 2019, the subsequent process equipment business income was $893.6 million, the SMT solutions business revenue was $896.6 million, and the materials business revenue was $236.4 million.

ASMPT has experienced several strategic mergers and acquisitions in the process of development, each of which has a significant effect on consolidating the original product line market position, cross-domain business expansion and cutting-edge technology reserve.

After several mergers and acquisitions and high investment in R & D, ASMPT's process equipment business has maintained the first global market share since 2002. After the acquisition of Siemens' SMT (surface mount technology) business in 2010, it quickly became a leader in the SMT industry, with the largest market share of SMT equipment in 2016, with a share of about 22%, especially in the promising automotive electronic SMT equipment market. In addition, packaging materials, which were split into independent departments in 2015, currently rank fourth in global market share.

Before entering the SMT business, ASMPT's revenue grew from HK $1.56 billion in 2001 to HK $4.732 billion in 2009, representing a compound annual growth rate of 14.9 per cent. After dabbling in SMT in 2010, revenue reached an order of magnitude, exceeding HK $10 billion and HK $15.7 billion in 2019.

• ASMI

ASMI is currently one of the top 10 equipment suppliers in the world, with R & D centers and production bases in seven countries and 1900 employees.
Xu Lai, director of business development of ASMI China, said in an interview that the biggest advantage of ASMI is ALD process, and ASMI is also the world's highest market share supplier of ALD process equipment. According to public data, ALD equipment is an indispensable thin film deposition equipment in advanced integrated circuit manufacturing process. ALD process has the advantages of low process temperature, accurate film thickness control and high step coverage.

It was previously reported that the semiconductor industry had been in a cold state from mid-to-late 2018 to the first half of 2019, but ASMI sales continued to grow for a consecutive quarter. Especially in July 2018, its front-end sales even reached an all-time high. Many of them are products of ALD systems.

In the 2019 annual report, ASMI said that in the context of the successful expansion of the ALD market, coupled with the healthy growth of other product lines, ASMI has outperformed the wider range of wafer manufacturing equipment in the past few years, achieving significant sales growth. 2019 was a very successful year, with sales up 37% after deducting settlement income. Coupled with the rising gross profit margin and controllable operating costs, operating profit increased by 77% in 2019.

Summary

In the more than 50 years since the establishment of ASMI, the brand and influence of Arthur on the industry is obvious. He effectively promoted the establishment of the European semiconductor equipment industry, and had a far-reaching impact on the entire semiconductor industry.

Today, ASML, ASMI and ASMPT are all very famous manufacturers in the industry, which continue to develop while continuing the innovative spirit of Arthur.