Intel stands firm behind ASML's takeover of SVG, says DoD okays merger

Intel stands firm behind ASML's takeover of SVG, says DoD okays merger
SANTA CLARA, Calif. -- Intel Corp. isn't budging one nanometer in its total support for the sale of Silicon Valley Group Inc. to ASM Lithography, despite the appearance of a controversial video tape that shows the former president of SVG Lithography and the chief technology officer of Ultratech Stepper Inc. against the deal because of national security concerns.

Without addressing specific arguments on the video tape, Intel's vice president of worldwide government affairs repeated the company's position and backing of ASML's purchase of SVG, saying that the merger is the best way to keep leading-edge lithography inside the United States.

"This is the right thing to do," said Jim Jarrett after being contacted for a comment about the video tape obtained by SBN.

The 15-minute video tape is being distributed by the U.S. Business and Industry Council, a non-profit business organization in Washington that claims to have some 1,500 members. About 650 copies of the tape have been sent to leaders in Congress and U.S. government officials--including President Bush--in an attempt to stop ASML from buying San Jose-based SVG (see April 13 story).

The proposed merger has been under a 45-day government review, which expires on Monday, April 23, according to officials. ASML, based in Veldhoven, the Netherlands, is planning to buy SVG for about $1.6 billion worth of stock to become the world's largest supplier of semiconductor photolithography systems.

Until the appearance of the video tape--called "Why The Sale Of SVG Co. Is Bad For The United States"--there was little or no public opposition to ASML's takeover of the San Jose company, according to industry officials. The main focus of concerns is on SVG's Tinsley Laboratories unit, which supplied lens-polishing capabilities for U.S. defense satellites in the 1990s.

Intel's Jarrett reiterated his company's support of the transaction, saying that a merger of SVG with ASML will not present any national security threats to the United States. "The merger has been examined by the Department of Defense," he said, claiming that the U.S. agency has already blessed the deal.

"We are still very much in favor of the merger," Jarrett told SBN. "We believe this is the best way to keep this technology within SVG and the United States."

But on the video tape, former SVG Lithography president Edward A. Dohring and Ultratech Stepper chief technology officer David Markle both raise a variety of questions about the impact of ASML's purchase of Silicon Valley Group. Dohring, who retired in December 1998, rejected claims that SVG was too small and too financially weak to compete against larger Japanese and European lithography suppliers--including ASML (see April 16 story). Markle said he worried about the loss of control over advanced and next-generation lithography systems, including extreme ultraviolet (EUV) technology, which could end up in the hands of unfriendly nations (see April 17 story).

ASML and SVG officials have blasted the video tape, calling it "hogwash" and labeling it a last-ditch "smear campaign."

Intel's Jarrett also noted that the ASML-SVG merger has the backing of the country's Semiconductor Industry Association (SIA). The SIA's board of directors have expressed unanimous support of the acquisition, according to Intel president and CEO Craig Barrett (see March 15 story).

And Jarrett disputed the claim that ASML's purchase of SVG would undermine U.S. control of EUV lithography, which is now being developed by an consortium with the backing from Intel, Advanced Micro Devices, IBM, Micron, Motorola, Infineon, and several U.S. national laboratories.