Intel and ASML Reach Agreements to Accelerate Key Next-Generation Semiconductor Manufacturing Technologies

  Intel and ASML Reach Agreements to Accelerate Key Next-Generation
  Semiconductor Manufacturing Technologies

NEWS HIGHLIGHTS

  * Intel commits €829 million (approximately $1.0 billion) to ASML’s research
    and development programs to help accelerate deployment of new technologies
    for 450-millimeter (mm) wafers and extreme ultra-violet (EUV) lithography
    by as much as two years
  * Intel to also initially purchase 10 percent of pre-transaction issued
    shares of ASML for €1.7 billion (approximately $2.1 billion) and commit to
    purchase an additional 5 percent of post-transaction issued shares as part
    of ASML’s program to enable minority investments of up to a 25 percent
    equity stake to its largest customers
  * R&D funding and equity investment agreements totaling €3.3 billion
    (approximately $4.1 billion)
  * Continued research and development in the field of lithography is critical
    to the long-term growth of the semiconductor industry

Business Wire

SANTA CLARA, Calif. -- July 09, 2012

Intel Corporation today announced it has entered into a series of agreements
with ASML Holding N.V. intended to accelerate the development of
450-millimeter (mm) wafer technology and extreme ultra-violet (EUV)
lithography totaling €3.3 billion (approximately $4.1 billion). The objective
is to shorten the schedule for deploying the lithography equipment supporting
these technologies by as much as two years, resulting in significant cost
savings and other productivity improvements for semiconductor manufacturers.

To achieve this, Intel is participating in a multi-party development program
that includes a cash contribution by Intel to fund relevant ASML research and
development (R&D) efforts as well as equity investments in ASML. The first
phase of this program consists of Intel committing to R&D funding of €553
million (approximately $680 million) to assist ASML in accelerating the
development and delivery of 450-mm manufacturing tools, as well as an equity
investment of €1.7 billion (approximately $2.1 billion) for approximately 10
percent of ASML’s pre-transaction issued shares. Intel will record the R&D
investment as a combination of R&D expense and pre-payments on future tool
deliveries.

The second phase of the program is conditioned upon ASML shareholder approval.
It includes an additional commitment by Intel of R&D funding of €276 million
(approximately $340 million) in ASML focused on accelerating EUV, as well as
an equity investment of €838 million (approximately $1.0 billion) for an
additional 5 percent of ASML post-transaction issued shares.

Intel will then hold a total of 15 percent of ASML’s issued shares. The total
equity investment will be €2.5 billion (approximately $3.1 billion). As part
of these agreements, Intel is also committing to advanced purchase orders for
450-mm and EUV development and production tools from ASML.

Both phases of the program are subject to standard closing conditions,
including customary regulatory approvals. The companies expect both phases of
the transaction to close after the shareholder vote in the third quarter.

Summary of Agreements
 
               Phase 1               Phase 2
                                                              Total
               450-mm                EUV Lithography
               Lithography
R&D            €553 million          Incremental €276         €829 million
Investment     (~$680 million)       million (~$340           (~$1.0 billion)
in ASML        over 5 years          million) over 5          over 5 years
                                     years
               €1.7 billion          Incremental €838         €2.5 billion
               (~$2.1 billion),      million (~$1.0           (~$3.1 billion)
Equity                               billion),
                                                               
Investment                                                   
in ASML        10 percent of                                  15 percent of
               pre-transaction       5 percent of             post-transaction
               shares                post-transaction         shares
                                     shares
Total          €2.2 billion          €1.1 billion (~$1.4      €3.3 billion
               (~$2.7 billion)       billion)                 (~$4.1 billion)
               Pending               Pending regulatory
Status         regulatory            and ASML shareholder      
               approval              approvals

“Productivity improvements driven by enhanced wafer manufacturing
technologies, especially larger silicon wafers and enhanced lithography
technologies with EUV are direct enablers of Moore’s Law, which delivers
significant economic benefits to consumers,” said Brian Krzanich, Intel senior
vice president and chief operating officer. “The transition from one wafer
size to the next has historically delivered a 30 to 40 percent reduction in
die cost and we expect the shift from today’s standard 300-mm wafers to larger
450-mm wafers to offer similar benefits. The faster we do this, the sooner we
can gain the benefit of productivity improvements, which creates tremendous
value for customers and shareholders.”

ASML has stated its intention to sell up to a 25 percent aggregate stake in
the company (on a post-transaction basis) to Intel and other semiconductor
manufacturers in this program. ASML is currently in discussions with other
customers and has publicly indicated it expects others in the industry to
participate in the R&D and equity program. Regardless of the outcome of ASML’s
discussions with other customers and upon completion of this two-phase
program, Intel’s ownership stake in ASML will not exceed 15 percent of ASML’s
post-transaction issued shares and will be subject to lock-up and voting
restrictions.

Intel intends to fund its R&D and equity investments in ASML from cash on hand
at its offshore subsidiaries.

“We are extremely encouraged that Intel has made these investments, which will
benefit every semiconductor manufacturer in the industry,” said Eric Meurice,
president and chief executive officer of ASML. "We hope to be able to announce
additional investments by our other customers in the coming weeks."

A critically important aspect of this transaction is the additional funding it
provides for ASML’s industry-leading EUV development program. When deployed in
conjunction with 450-mm wafer production, the productivity and cost benefits
of EUV will be substantial for Intel and other semiconductor manufacturers.
Intel was involved in the formation of the first EUV consortium in 1997. With
these additional R&D investments for EUV, ASML and Intel hope to help lead the
semiconductor industry in the transition to this critical technology.

Risk Factors

This press release contains forward-looking statements regarding the proposed
transactions between Intel and ASML, including but not limited to statements
regarding future Intel equity investments in ASML; future Intel R&D
investments in ASML and in the development of 450-mm wafer technology and EUV
lithography and production tools; the timing and benefits of developments in
450-mm wafer technology and EUV lithography; Intel’s intentions regarding
purchase orders for 450-mm and EUV development and production tools; and
ASML’s intentions regarding R&D and equity investments by third parties.
Actual events or results may differ materially from those contained in these
forward-looking statements. Among the important factors that could cause
future events or results to vary from those addressed in the forward-looking
statements are risks and uncertainties arising from, among other things, the
possibility that one or more closings of the transactions may be delayed or
may not occur; difficulties or delays in research and development of 450-mm
and EUV technologies; the ability of Intel and ASML to retain key employees
and customer and supplier relationships; demand for and market acceptance of
products produced using such technologies or competing technologies;
developments in competing technologies; pricing pressures and actions taken by
competitors; the timing and execution of the manufacturing ramp, and
manufacturing yields, at Intel’s production facilities; and litigation or
regulatory matters involving intellectual property, antitrust and other issues
that could affect the closings of the transactions, the future operation of
Intel or ASML and/or Intel’s or other entities’ dealings with ASML.

In addition, please refer to the documents that Intel files with the SEC on
Forms 10-K, 10-Q and 8-K. The filings by Intel identify and address other
important factors that could cause events and results to differ materially
from those contained in the forward-looking statements set forth in this press
release. Intel is under no duty to update any of the forward-looking
statements after the date of this press release to conform to actual results.

About Intel

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Contact:

Intel Corporation
Reuben Gallegos, 408-765-5374
Investor Relations
reuben.m.gallegos@intel.com
Chuck Mulloy, 408-765-3484
Media Relations
chuck.mulloy@intel.com