Chip equipment maker ASML has signed up TSMC to further strengthen its research and development into next-generation chip-making kit to make micro chips smaller and more energie efficient.

TSMC has joined ASML Customer Co-Investment Program, aimed at accelerating the development and industrialization of key next-generation semiconductor manufacturing technologies, which include extreme ultraviolet (EUV) lithography technology and 450-millimeter lithography tools. The agreement includes an investment amount of ?€838 million in ASML to acquire a 5% of its equity; and to commit ?€276 million, spread over 5 years, to ASML's research and development programs.

Last month, ASML's chief executive Eric Meurice said he had asked its three biggest customers - Intel, TSMC, and Samsung Electronics - to help fund its costly R&D and invest in up to 25 percent of its shares.

"One of the biggest challenges facing IC scaling today is how to effectively control the escalating wafer manufacturing cost," said Shang-yi Chiang, TSMC's Executive Vice President and Co-Chief Operating Officer. |We are confident that the additional funding for ASML's research and development programs will help secure and accelerate EUV development activities, in parallel with the necessary focus on improved performance of existing optical lithography tools and speed up the deployment of new technologies for 450-millimeter wafers. This effort will help the industry control wafer cost, and therefore protect the economic viability of Moore's Law.

"We welcome TSMC to our Customer Co-Investment Program announced on July 9, 2012. The objective of the Co-Investment program is to secure and accelerate key lithography technologies. These technologies will benefit the entire industry and are not restricted to our Co-Investment partners,| said Eric Meurice, Chief Executive Officer of ASML.

ASML cut a similar deal with Intel in July and said then that it expected to reach agreements with TSMC and Samsung Electronics.

ASML is the world's largest supplier to chipmakers of machines that etch circuits onto silicon wafers.