To date, Canon (Tokyo) has reportedly installed only one 193-nm immersion tool despite rolling out the machine in 2007. Sources believe the company is having technical problems with the machine. Amazingly, the $45 billion camera and office equipment giant can't crack the market.

Canon's reported demise at the high-end, which could reduce the supply base in lithography, may also have a potential impact on overall tool costs. With--or without--Canon's presence in leading-edge lithography, analysts warn that future 193-nm immersion scanners could double in price and run from $80-to-$90 million per unit at the 22-nm node. Beyond optical technology, extreme ultraviolet (EUV) lithography is expected to hit $100 million or more per tool---if or when that technology ever appears in the market.

This in turn begs some critical questions: Will chip makers be able to afford future lithography tools? And is the state of lithography--and the overall fab tool sector--healthy?

It's unclear. In the marketplace, Canon (Tokyo) is reportedly telling customers it will no longer develop future, leading-edge lithography tools, namely 193-nm dry and immersion scanners, according to industry sources. The company will support its exiting 193-nm tools, but it will no longer develop future versions of those systems, sources said.

Its efforts in EUV and maskless are fading as well. Instead, Canon will focus on the development of its older i-line and 248-nm lithography lines for use in LCD and mix-and-match chip production.

Officials from Canon denied that it has exited from the 193-nm lithography market. ''Canon will not halt development of its immersion scanners,'' according to a Canon spokesman in Japan. ''Canon will continue development as it has done in the past, and will also continue to distribute existing models.''

Others beg to differ, saying there are ongoing rumors that Canon has ended R&D at the high-end of lithography. ''Canon is mostly doing 248-nm and i-line now,'' said David Motozo Rubenstein, an analyst with MF Global in Tokyo. ''I believe that Canon cannot compete in immersion.''

Asked what type of success Canon is having in 193-nm lithography, Klaus Rinnen, an analyst with Gartner Inc., said: ''If you look at the data, not much.''

For decades, Canon's primarily focus has revolved around cameras and office equipment. Canon also claims it is serious in lithography, but based on recent failures at the high-end, the company must be asking themselves tough questions about its efforts in the arena. One of those questions is clear: ''Do they want to be in the business or not?'' Rinnen quizzed.

Now, for the most part, there are only two lithography suppliers at the leading-edge: ASML Holding NV of the Netherlands and Nikon Corp. of Japan, said G. Dan Hutcheson, president of VLSI Research Inc. ''Canon has developed a leading-edge (193-nm) tool,'' Hutcheson said. The problem is ''everyone has bought a tool (from either ASML or Nikon) and no one wants to switch.''

To most, Canon's struggles in leading-edge lithography come as no surprise, as it has failed to gain any traction against its two main rivals. But the ramifications are clear in not having Canon as a potential strong player at the high-end of lithography. For years, Canon competed on price. Some chip makers would use Canon as leverage as a means to keep the other lithography vendors from price gouging.