The Next Big Thing? By Yearend, Maybe

Semiconductors ▶ Chipmakers await machines that make faster transistors ▶ “We may never see a payback on the investment and time”

As chipmaking advances have run up against the limits of physics, threatening to push up manufacturing costs, the industry’s leaders have placed a great deal of faith in a Dutch company called ASML. For most of the past decade, ASML has been promising that its new technique for creating transistors would allow chips to keep getting slimmer and more powerful at the rates we’re used to. In 2012, Intel, Samsung, and TSMC took the unprecedented step of investing about $1.6 billion in ASML to speed its research and paid close to $5 billion for 23 percent of the company.

ASML expects to ship as many as seven new machines this year so chipmakers can start testing the technology, known as extreme ultraviolet lithography (EUV). Chief Executive Officer Peter Wennink says most of his customers expect to incorporate EUV by 2019, and he’s prepping for orders within the next year. “The industry needs EUV,” he says.

So far, though, the technology for EUV is proving less efficient than once thought and possibly unable to deliver the returns investors hoped for. Even alternatives that would make smartphone and PC parts costlier have started to look more attractive, says Patrick Ho, an analyst at investment bank Stifel Nicolaus. “The industry made their bet several years ago that EUV would be the next generation,” he says. “It’s been very disappointing.” TSMC declined to comment for this story. Samsung didn’t respond to a request for comment.