Features:

INTEL SKIPS CHIP-MAKING TOOL GENERATION

U.S. semiconductor maker Intel said it will not buy the new generation of chip lithography tools just launched on the market, casting doubt over the future of these machines.

The world's largest chip maker will not buy so-called 157 nanometer lithography tools but instead hopes to extend the life of its current generation of 193 nanometer tools until it can jump straight into the successor of 157 nanometer tools, called Extreme Ultraviolet (EUV) tools.

EUV machines, which can make even finer electronic circuits than the 157 nanometer tools, are still under development and are not expected before the end of the decade.

Lithography tools are used to project an image of circuits and transistors on silicon wafers. Netherlands-based ASML, the world's largest maker of chip lithography tools and an Intel supplier, earlier said it had been informed by Intel of its decision, taken earlier this week.

An Intel spokesman confirmed his company would not buy 157 nanometer machines and would go straight to EUV but gave no details.

ASML said it was hopeful other companies besides Intel would still buy the 157 nanometer machines. "We haven't heard from IBM, for instance," a spokeswoman said.

Last month ASML shipped the first 157 nanometer machine to research center IMEC. This surprised analysts, who had doubted the new tool would ship on time after its development was marred by teething problems and setbacks. IMEC said the machine worked fine.

Intel's decision to skip the new system could mean the machine was not up to what would be its more demanding usage compared with IMEC, or could be explained because Intel has a lot of development money riding on EUV, industry sources said.

Analysts said the Intel move was not necessarily bad news for the company.

"It isn't great news, but it means Intel will continue to use 193 nanometer tools for many more years, and ASML will not see the low profit margins associated with the introduction of new tools," said Ewald Walraven at ING in Amsterdam.

Uche Orji at JP Morgan in London even said it was positive for ASML, "because we believe they can moderate their R&D spending and improve the returns on investment in the recent tools that they have introduced."

Intel now hopes to produce chips with circuits as thin as 45 nanometers with the 193 nanometer scanners. That is almost twice as thin as currently possible on these machines, and circuits would have a width of less than one-thousandth of a human hair.

Intel, ASML and others are working together to develop EUV machines. Intel is expected to evaluate EUV machines also from ASML's rivals, Nikon and Canon from Japan.