ASML, Samsung Forge Unprecedented Alliance - Is The Semiconductor Industry Consolidating?

ASML Holding ASML, a Dutch company specializing in chip-making equipment, and Samsung Electronics Co SSNLF, a South Korean chipmaker, have committed to jointly invest 1 trillion South Korean won ($760 million) in a new facility in South Korea. 

The plant will focus on developing state-of-the-art semiconductor processing technology. 

This collaboration is part of South Korean President Yoon Suk-yeol's four-day visit to the Netherlands, which aims to establish a "semiconductor alliance" between the two nations, CNBC reports.

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ASML is the world's sole producer of extreme ultraviolet (EUV) lithography machines, essential for manufacturing advanced chips like those in the latest Apple Inc AAPL iPhones, primarily produced by Taiwan's Taiwan Semiconductor Manufacturing Company Ltd TSM. 

President Yoon, accompanied by King Willem-Alexander of the Netherlands, toured ASML's headquarters and its next-generation EUV machine production site, underscoring the significance of this partnership.

Samsung, a global leader in dynamic random-access memory (DRAM) chips found in consumer devices, relies on ASML's EUV technology to produce superior chips. 

This collaboration aims to enhance chip efficiency and reduce production costs. 

Additionally, ASML will work with SK Hynix, the world's second-largest DRAM chipmaker, on hydrogen gas recycling technology to decrease power usage and costs in EUV processes further.

President Yoon's visit to the Netherlands is pivotal in Korea-Netherlands relations, particularly in the semiconductor sector. He emphasized the importance of semiconductors as the cornerstone of cooperation between the two countries and highlighted ASML's role in this partnership.

The alliance aims to create an organized institutional framework addressing global semiconductor supply chains, recognizing semiconductors as strategic assets amid increasing geopolitical risks.

This initiative reflects both countries' commitment to maintaining a stable and efficient global semiconductor supply chain.

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Price Action: ASML shares are trading higher by 0.84% at $726.61 premarket on the last check Wednesday.