After two decades in development, chipmakers are making a costly bet on a technology that will cram even more transistors onto silicon. Their success may hinge on a little-known company in the suburbs of Tokyo.

Lasertec Corp is the world’s sole maker of equipment that tests glass squares slightly bigger than a CD case, used as a stencil for chip designs. By shining light through the squares, circuits smaller than the width of a few strands of DNA are imprinted onto silicon wafers in a process called lithography. These templates have to be perfect — even a tiny defect can make every chip in the batch unusable.

Consumers take it for granted that gadgets will keep getting slimmer, more powerful and cheaper, but the chip companies are running out of ways to etch ever-smaller circuit patterns onto silicon. After years of setbacks, the industry has settled on extreme ultraviolet lithography, which uses plasma as the light source to draw lines smaller than 7 nanometres. That’s the size seen in Apple Inc’s A12 Bionic chip, featured in the iPhones XS and XR.

Monopoly in the market

In 2017, Lasertec solved the final piece of the puzzle when it created a machine that can test blank EUV masks for internal flaws, giving it a monopoly.

Lasertec has already received orders for ¥4-billion ($36 million) machines that test EUV blanks, according to Lasertec President Osamu Okabayashi. The company may see additional sales as soon as this summer, depending on how quickly Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. ramp up mass production, he said.

“We spent six years developing this equipment,” Okabayashi said in an interview. “At this point its become an industry standard and it would be very difficult for somebody else to enter the space,” he added.

Not an easy process

An EUV mask, a sandwich of about 80 alternating layers of silicon and molybdenum, can fetch as much as $1,00,000. Lasertec’s machines can spot problems early on, which is critical to making the technology cost competitive. For EUV, masks have to be perfect, Okabayashi said. EUV lithography is so complex and expensive that so far only Samsung and TSMC have said they will use it to move to 7-nanometer chipmaking. Intel Corp has delayed its introduction, while difficulties in making EUV economically viable have prompted Globalfoundries Inc to reportedly abandon it altogether.

Apple’s 7-nanometre processor is manufactured by TSMC and is specialised for machine-learning applications.

“It used to be that chip demand was completely dependent on product cycles for personal computers,” Okabayashi said. “But then came smartphones and pretty soon well be able to add AI, IOT and 5G to the list of applications driving demand,” he added.

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