As part of the deal Intel will invest in ASML’s research into next-generation chipmaking technology.
ASML makes machines that etch circuits onto silicon wafers and it is famous for its 450-millimeter wafer sizes and “extreme-ultraviolet” or EUV lithography.
The company competes with Canon and Nikon and its main clients are Intel and its sworn rival Samsung. It is not clear where this deal will leave Samsung, which could find itself having to come up with a similar deal with Canon or Nikon.
Intel wants to speed up the next generation of chip manufacturing processes from ASML by as much as two years. It will cost a bomb but could save itself billions by cutting chip production costs.
Under the deal Intel has written a cheque for an initial 10 percent stake in its European supplier and wants to tack on another five percent if it wins shareholder approval, for a total of about $3.1 billion.
It will also move on to larger wafer sizes in its own processing system.
According to Reuters, speeding up a move to 450mm fabs, Intel will make it difficult for smaller chipmakers to compete. They will have to splash out on ever more expensive gear to make cheaper chips that can compete with Intel.