Season 6, Post 20: James Bond, for a morning
For the briefest of moments your author believed he could have been in a Bond movie. He was obliged to dress from head to foot in protective white gear. His hands were gloved and his face masked. He had to stand in a sterilisation chamber for 30 seconds before being let into an immense white room. In it sit the only two machines of their kind in the world. Each weighs 60 tons and contains an additional 60 tons of equipment within it. In order to support them, they are embedded into concrete over 3 metres deep. Then reality beckoned as our host for the trip said “the heart of digitalisation beats here.”
Located in Oberkochen, a small German town just under 200km from Munich, is the Carl Zeiss Semiconductor Manufacturing Technology plant. Almost all the local inhabitants work there. And they perform an absolutely critical role in ensuring that the whole digital ecosystem functions. Privately-owned Zeiss started making microscopes in the 19th century. Its deep knowledge of optics has proven integral for the semiconductor industry, helping to enable the continuation of Moore’s Law. Put simply, for transistor density to improve, so must optics. Whereas Zeiss lenses used to feature in the machines that make semiconductors chips, now their mirrors do. Mirrors transfer extreme ultraviolet light beams most efficiently onto the silicon wafers that eventually become semiconductor chips.
Given the world’s growing hunger for semis (think not just AI, but almost anything digital), the machines that make them and their underlying components must be perfect. Our group of just ten were privileged to see how glass is transformed into a mirror through a complex process of grinding, polishing, coating, mounting and finishing. To produce just one mirror can take as long as a year (although clearly many are in simultaneous production at any given time). In the metrology room described above, the mirrors are tested for precision. Their accuracy has to reach a standard of 5 picometres (or trillionths of a metre), or less than a single hydrogen atom. Zeiss maintains that “we can measure better than anyone else in the world.”
The final products produced by Zeiss are typically shipped to Veldhoven in the Netherlands, the location of ASML’s headquarters, which we profiled in our first Blog post of 2024. Here, they are assembled with many other parts into large machines that are then sold to the likes of Intel and TSMC. Its latest products can contain over 100,000 parts and weigh as much as 100,000kg. To ship one might require 250 crates and 13 freight containers spread across 3 cargo planes. Without them, the future cannot happen. Visiting Oberkochen serves as an invaluable reminder of the sheer complexity and precision required throughout the process. The humble chip needs a lot of mirrors and optics.
22 May 2024
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in ASML. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
Photo courtesy of Carl Zeiss
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