20 years of restarting life

Chapter 3684 Have Foresight and Look to the Long Term

Although Philips has been selling shares since ASML went public in 95, it remains the largest shareholder. Philips is unwilling to allow the company to enter the DUV 193nm field.

Although ASML has been profitable for years, its 13.3% net profit margin is not very high within the Philips system.

Even though ASML has been profitable for the past eleven years, its shareholder dividends have been negligible because only continuous investment in research and development can maintain its leading position in the industry.

Moreover, the KrF light source in lithography machines has already reached the limit of the 130nm process. To break through again, it is necessary to spend a lot of money to find new light sources and develop new lithography machines.

Philips has also been struggling these past few years, otherwise it wouldn't have repeatedly sold off ASML shares to inject capital into its parent company. It simply doesn't have the energy to handle a project involving billions of dollars in investment.

The company's business encompasses home appliances such as televisions, washing machines, air conditioners, and refrigerators; kitchen and bathroom products; maternal and infant care products; lighting; electric shavers; medical diagnostic imaging and patient monitoring equipment; mobile phones; and computers.

Competing for market share with similar products in various fields and around the world, if we were to gamble billions of dollars on the 193nm lithography machine, even if we succeeded several years later, the price of success would be that we would have to allocate billions of dollars to ASML in these numerous fields now.

This is tantamount to starving one's own large group of sons in order to raise an adopted son.

As a Dutch company, Philips employs a large number of people in the Netherlands. Whether it is the company's own social responsibility and commitment, or the requirements of Dutch management, the company needs to absorb a large number of people to increase the domestic employment rate.

As a high-tech company, ASML has very limited capacity for manpower. No matter how you look at it, Philips would never risk its core competitiveness for such a gamble.

Philips has made it clear to the remaining ASML shareholders and management that the company will continue to gradually reduce its shareholding over the next few years until it no longer holds any shares.

Philips is very willing to resell all of its remaining shares, provided ASML can find a willing buyer.

Therefore, for ASML now, developing the next generation of lithography machines to maintain its leading position in the industry and finding a new major shareholder are two things that are intertwined.

Intel, Motorola, AMD, and IBM, companies that are interested in participating in and investing in 193nm research and development, are also the next shareholders they are looking for.

ASML's idea is to expand the share capital of listed companies by having these companies purchase the shares themselves, rather than having them approach Philips to buy shares.

After expanding its share capital, ASML's market value will increase, and Philips' shareholding will be diluted accordingly. However, with these corporate shareholders, it will be easier for the original owner to sell its shares on the market.

These companies became shareholders, Philips reduced its holdings and raised funds, and ASML also gained R&D funding. It was a win-win-win situation for all three parties.

This is why companies like Intel have been arguing about investments, because they are not having an easy time right now. If they decide to invest heavily, it means that their investments in other areas will decrease accordingly.

Even their own core competencies may fall behind due to funding gaps or be caught up by competitors.

This is simply intolerable.

The Intel negotiator clearly knew all this, which is why he became so nitpicky and annoying.

The problem now is that ASML is aware of the predicament these companies are facing, but it has to suppress its dissatisfaction because ASML is now somewhat like Philips' abandoned child, desperately needing a group of adoptive parents.

These adoptive parents also have to support ASML, provide it with research and development funding, and market its products.

"If ASML really accepts the investment from North America for 1nm, will it anger companies like Intel?"

At this point, Wayne Allen, the company's executive vice president, chief strategic procurement officer, and procurement officer, finally raised the question that everyone had been deliberately avoiding. "They don't invest properly themselves, and then they provoke others to invest in them—how shameless!"

Martin roared in fury.

The others were speechless. If these companies were not needed, it would be no big deal. But the problem was that ASML needed these companies to provide market access and even technology licenses and support for R&D.

Regardless of how much money North America can contribute to this nanometer, even if they could contribute four or five billion US dollars, the market is still equally important.

"Let's negotiate first, and then contact Intel to see what they have to say."

Doug said with some concern, "Only if the conditions are too harsh, then Intel, Motorola, AMD, and IBN won't have much to say in comparison. Or perhaps they're willing to invest so much money to get better treatment than IBN North America."

The people present could all tell that Doug's words were very dishonest; he was using North America as a tool.

However, the business world is inherently cruel. If ASML had been a little more lenient or acted as an "honest and good person" all these years, the company would have been finished long ago.

ASML's current market capitalization is approximately $180 billion. Based on the project department's rough cost calculations, ArFi's investment will not be less than $50 billion. This means that after the total equity capitalization expands to $23 billion, these investing companies can obtain approximately 230% of the shares.

As the largest shareholder, Philips, ASML's former owner, now holds 28.6% of the shares. If ASML's stock price can remain stable, it could cash out approximately another $51 billion.

One in and one out is almost a perfect replacement.

The problem is that if ASML decides to gamble on ArFi, no one knows whether the market will react upwards or downwards. If Philips sells off too quickly, how much money they can ultimately cash out is also an unknown.

The best approach would be to reduce the 'investment/equity' ratio of one nanometer North America with equal investment. This would obviously make companies like Philips and Intel more willing to accept this scapegoat.

The question is, is the other party willing to be the fool?

The reality is that even with such a large investment, no one can guarantee that the ArFi lithography machine will be successfully developed.

“If OneNano North America and President Zhao have exceptional vision and foresight, I believe they will agree to this premium.”

Doug himself wasn't sure, and said to Martin, "I'll leave this afternoon to you!"

"I?"

Martin was baffled: "But I'm bad with words!"

"Use your sincerity to tell these Easterners that a tremendous opportunity is now before them, allowing them to own a world-leading high-tech company. ASML will continue its past glory, defeat Nikon, and become the world's most powerful stepper lithography machine company. And at that time, ASML's market value will definitely not be the current 200 billion US dollars!"

Doug spoke so emotionally that even he was moved by his own words.

A burst of enthusiastic applause erupted throughout the conference room.

As Doug said, any one of these 47 veterans will not stop here, but will strive to be number one in the industry and become the engine of global high-tech enterprises.