SANTA CLARA, Calif. -- Intel Corp. is quietly ordering and installing its first chip-equipment for the 65-nm node, in a massive procurement effort initially worth about $500-to-$700 million, according to industry analysts. Over time, Intel's 65-nm fab-tool procurement bonanza could extend into the billions of dollars, analysts said.

The initial chip-equipment winners for Intel's 65-nm processor business reportedly include ASMI, ASML, Genus, Nikon, Novellus, among others, according to analysts and industry sources. A spokesman for Intel declined to comment, saying that the company does not discuss its equipment vendors.

Sources, however, indicated that ASML Holding NV and Nikon Corp. each won a piece of the 65-nm lithography business in terms of supporting Intel's bread-and-butter processor lines. And in a huge upset, Novellus Systems Inc. reportedly beat Applied Materials Inc. for a hotly-contested copper barrier/seed physical-vapor deposition (PVD) tool order at Intel worth about $125 million, according to industry sources.

As expected, ASM International B.V. won the low-k and strained-silicon equipment business for Intel's 65-nm node. ASMI had been the incumbent supplier of these tools at Intel. And in a surprise move, Intel is reportedly looking to deploy atomic layer deposition (ALD) at the 65-nm node, by using a radical tool that combines intellectual property from two rivals--ASMI and Genus Inc., analysts said.

Intel is also evaluating laser thermal processing (LTP) technology from Ultratech Inc. for the 65-nm node, they added. Fab automation orders will likely go to Asyst Technologies Inc. and Daifuku Co. Ltd.

The stakes are high for fab-tool makers, given that Intel is the world's largest buyer of chip equipment. Intel has made its final decision on some tools for the 65-nm, while other equipment selections are still up for grabs, said Cristina Osmena, a semiconductor equipment analyst for Needham & Co., an investment banking firm in New York.

"I think (Intel's 65-nm procurement effort) has been an ongoing process for some time," Osmena said. "I think they are still in the process of selecting some tools."

65-nm race

Intel itself is racing against other chip makers to deploy its 65-nm technology, which is slated to move into production in 2005--if not earlier. Last year, for example, microprocessor rival Advanced Micro Devices Inc. broke ground on a 300-mm fab, named Fab 36, in Dresden, Germany. The fab, to cost $2.4 billion, is a 65- to 45-nm plant that is expected to move into production in 2006.

Also last year, Intel disclosed the details of its 65-nm process, which is an 8-metal layer technology that deploys copper, low-k dielectrics, strained-silicon, and alternating phase-shift photomasks. It also disclosed that its DID 300-mm development fab in Oregon will become the initial high-volume plant for both its 65- and 45-nm process technologies (see November 24, 2003 story).

The initial equipment orders at the D1D fab are worth an estimated $500-to-$700 million, Osmena said. For some time, Intel has been running the "development equipment" within D1D for 65-nm processing, she said.

Over time, Intel also plans to convert its Fab 12 plant, a 200-mm wafer fab in Chandler, Arizona, to a 300-mm facility. The conversion is slated to begin in the first half of 2004, and 300-mm production is scheduled to begin until late 2005. The converted fab, to process 65-nm wafers, is estimated to cost $2 billion.

Tool orders and installation for Fab 12 are expected to begin at the end of the third quarter of this year, Osmena said. "I think they are procuring tools for Chandler," she said.

Tools of the trade

Meanwhile, in the hotly-contested equipment procurement arena, ASML and Nikon will share the 65-nm lithography business within Intel's microprocessor business. ASML and Nikon were the incumbent vendors for both Intel's 90-nm processor and flash memory businesses, it was noted.

ASML and Nikon will each get a piece of the key critical layer portions of the 65-nm processor business at Intel, Osmena said. "The mix is still up for grabs," she said, referring to the ratio of orders for each company.

Some believe that Nikon will get the upper hand in the procurement cycle. Intel is expected to procure i-line, 248-and 193-nm tools for the 65-nm node. Intel will use high NA, "dry" 193-nm machines for the critical layers.

The chip maker is also reportedly taking a hard look at immersion lithography, but it has not officially added the technology to its roadmap, sources said. At present, Intel plans to jump from "dry" 193-nm tool for the 65- and 45-nm nodes, to extreme ultraviolet (EUV) lithography for the 32-nm chip processing, that is, if EUV is ready.

Meanwhile, in a big surprise, Novellus has reportedly topped Applied for a $125 million copper/barrier seed PVD tool order, according to sources in the industry. The order is a blow for Applied, given that the chip-equipment giant had been the incumbent supplier of PVD tools at Intel, it was noted.

Applied and Novellus were fighting for the order at Intel (see March 19 story), but Novellus reportedly won "80 percent of the business at 65-nm," said one source. "Novellus is well positioned at Intel," added Osmena.

Applied has reportedly won a significant etch and CMP equipment order within Intel, said Vincent Valentine, an analyst with from investment banking firm Mitchell, Detwiler & Co. in Boston. "I do believe Applied received some etch business, but some also believe Lam got some etch business as well," he said, referring to Lam Research Corp.

Valentine also believes that Intel is accelerating its efforts in ALD at 65-nm for use in ultra shallow junction applications. In doing so, Intel is reportedly looking to use a combination and radical ALD tool based on ASMI's chamber technology and Genus' IP, Valentine said.

Still to be seen, however, is if Intel will adopt LTP from Ultratech or rival flash lamp annealing technology at the 65-nm node. At present, Intel reportedly uses rapid thermal processing tools (RTP) for annealing.

"Intel has not decided between LTP and flash lamp," Osmena said. "Flash anneal has a better cost of ownership." Ultratech reportedly has two of its LTP tools in evaluation at D1D, according to Valentine.