Optical lithography, currently being used for 45-nm semiconductor devices, is expected to be extended further towards the 32-nm and 22-nm node. A further increase of lens NA will not be possible but fortunately the shrink can be enabled with new resolution enhancement methods like source mask optimization (SMO) and double patterning techniques (DPT). These new applications lower the k1 dramatically and require very tight overlay control and CD control to be successful. In addition, overall cost per wafer needs to be lowered to make the production of semiconductor devices acceptable. For this ultimate era of optical lithography we have developed the next generation dual stage NXT:1950i immersion platform. This system delivers wafer throughput of 175 wafers per hour together with an overlay of 2.5nm. Several extensions are offered enabling 200 wafers per hour and improved imaging and on product overlay. The high productivity is achieved using a dual wafer stage with planar motor that enables a high acceleration and high scan speed. With the dual stage concept wafer metrology is performed in parallel with the wafer exposure. The free moving planar stage has reduced overhead during chuck exchange which also improves litho tool productivity. In general, overlay contributors are coming from the lithography system, the mask and the processing. Main contributors for the scanner system are thermal wafer and stage control, lens aberration control, stage positioning and alignment. The back-bone of the NXT:1950i enhanced overlay performance is the novel short beam fixed length encoder grid-plate positioning system. By eliminating the variable length interferometer system used in the previous generation scanners the sensitivity to thermal and flow disturbances are largely reduced. The alignment accuracy and the alignment sensitivity for process layers are improved with the SMASH alignment sensor. A high number of alignment marker pairs can be used without throughput loss, and furthermore the GridMapper functionality which is using the inter-die and intra-die scanner capability can reduce overlay errors coming from mask and process without productivity impact. In this paper we will present the main design features and discuss the system performance of the NXT:1950i system, focusing on the improvements made in overlay and productivity. We will show data on imaging, overlay, focus and productivity supporting the 3X-nm node and we will discuss next improvement steps towards the 2X-nm node.© (2010) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.