AMSTERDAM, April 18 (Reuters) - Intel ( INTC ) said on

Thursday it had become the first company to assemble one of

Dutch tech group ASML's new "High NA EUV" lithography tools, an

important part of the U.S. computer chip maker's drive to

outshine rivals.

Intel ( INTC ) was the first company to buy one of the 350 million

euro ($373 million) machines made by top chip equipment supplier

ASML. The tools are expected to lead to new

generations of smaller, faster chips, though there are financial

and engineering risks involved.

"We agreed to the pricing when we committed to the tools and

we would not have done that if we were not confident there were

cost-effective uses for it," Intel's ( INTC ) director of lithography

Mark Phillips said in a briefing with journalists.

ASML, Europe's largest tech firm, dominates the market for

lithography systems, machines that use beams of light to help

create the circuitry of chips.

Lithography is one of many technologies chipmakers use to

improve chips, but it is a limiting factor in how small the

features on a chip can be - smaller means faster and more energy

efficient.

The High NA tools are expected to help shrink chip designs

by up to two thirds, but chipmakers must weigh that benefit

against a higher cost and whether older tech may be more

reliable and good enough.

INTEL'S ( INTC ) MISTAKE

Intel's ( INTC ) determination to be the first to adopt High NA is

not accidental.

It helped develop EUV technology - named for the "extreme

ultraviolet" light wavelengths it uses. But it began using

ASML's first EUV product later than Taiwanese rival TSMC

, which CEO Pat Gelsinger has acknowledged was a big

mistake.

Instead, Intel ( INTC ) focused on techniques known as

"multi-patterning" - essentially going through more steps with

lower resolution lithography machines to achieve an equivalent

effect.

"That's when we got in trouble," Phillips said.

Although the older DUV tools were cheaper, complex

multi-patterning became too time consuming and led to too many

faulty chips, slowing Intel's ( INTC ) commercial progress.

The U.S. company has now adopted first generation EUV for

the most crucial parts of its best chips, and Phillips said it

expects the move to High NA EUV will be smoother.

"Now that we have EUV we're looking forward, we don't want

to get in the same boat where we have to push (ASML's first

generation EUV machines) too far," he said.

Phillips said the machine at its Hillsboro, Oregon, campus

would be "fully up and running later this year".

Intel ( INTC ) plans to use the machine, which is the size of a

double decker bus, in the development of its 14A generation of

chips in 2025, with early production expected in 2026 and full

commercial production in 2027.

ASML said alongside earnings this week it had begun the

process of shipping a second High NA system to an unidentified

customer, likely TSMC or South Korea's Samsung.

Shipping and installation of the massive tools may take up

to six months, giving Intel ( INTC ) a head start.

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