China’s DUV Strategy in the Face of EUV Blockades: Will It Ever Catch Up to ASML?

In recent times, the semiconductor industry has faced major upheavals, particularly due to tensions between China and the West. A key event was when Dutch officials, under pressure from the United States, revoked ASML’s license to export their state-of-the-art extreme ultraviolet (EUV) lithography machines to China. These machines are crucial for constructing advanced chips with sizes of less than 7nm. This decision has sparked what some experts are calling a “semiconductor cold war,” where companies like SMIC (Semiconductor Manufacturing International Corporation) find themselves in a tight spot, unable to acquire the necessary equipment to produce advanced chips for artificial intelligence (AI) applications. However, rather than stalling China’s production, this scenario has led to an increased reliance on older deep ultraviolet (DUV) technology and a race to develop local alternatives.

The Impact of Sanctions on Semiconductor Manufacturing

EUV machines are incredibly complex and expensive, often costing hundreds of millions of dollars, making them vital for producing high-performance chips sought after in today’s tech-savvy world. These machines incorporate thousands of components, predominantly from the U.S., and China currently lacks access to them. The US sanctions, which have been tightening since 2022, not only block EUV exports but also restrict advanced DUV systems produced by ASML. Countries like the Netherlands and Japan have joined in on these limitations, even scrutinizing service contracts for existing ASML machines in China.

This creates a foggy landscape for Chinese companies trying to procure chips. While some products, like Nvidia GPUs, still manage to find their way into China through grey markets, getting advanced equipment like a lithography scanner isn’t so simple. Washington has maintained strict controls on export, complicating any efforts to smuggle such heavy machinery.

Relying on Deep Ultraviolet Technology

DUV lithography is significantly older than EUV technology, using 193nm lasers to produce chips effectively at 28nm. Although DUV can be pushed to create chips as small as 7nm through a method known as multi-patterning, this technique is not without its challenges. For instance, Intel’s experience with its 10nm process showcased how cumbersome and yield-sensitive this method can be. Yet, it remains the only avenue for Chinese foundries at present.

The Kirin 9000-class chips developed for Huawei are examples of DUV’s current limitations. Although they function, their volume and efficiency lag behind chips produced in Taiwan and South Korea. Despite these obstacles, Chinese manufacturers continue to use their existing fleets of DUV machines from ASML. Remarkably, nearly half of ASML’s equipment shipments in the second quarter of 2024 were sent to China, indicating how dependent the nation remains on imported technology.

Entering the Era of Domestic Solutions

Amidst this landscape, there’s been an emergent push within China to develop homegrown alternatives. In 2023, Shanghai Micro Electronics Equipment announced the completion of its 28nm immersion scanner, the SSA800-10W. While it does not match the sophistication of ASML’s offerings, it’s a significant step forward as it was designed without utilizing any U.S. intellectual property. Reports suggest that companies like SMIC are experimenting with DUV prototypes that are aimed at reaching 7nm capabilities.

Even with persistent challenges, a self-developed DUV scanner would give Chinese foundries a form of independence from external pressures. China has often stated that strategic self-sufficiency is more crucial than achieving parity with leading firms like TSMC or Samsung.

The Long Game: An Uncertain Future

Despite the significant gap between China’s DUV capabilities and ASML’s advanced technologies, the country is playing a long game. Industry experts estimate that China is about 10 to 15 years behind in this technological race. The journey will be tough, as multi-patterning demands more resources and intricacies that can lead to higher costs per chip.

Even so, any domestic chip, particularly a 7nm-class one, is better than none. Huawei has made strides in restructuring its supply chains to favor local vendors, helped by new policies requiring firms to source at least 50% of their chips within China.

Each round of sanctions only seems to speed up China’s quest for localization, making them less reliant on foreign technologies. In this so-called “semiconductor cold war,” while EUV technology remains sealed off from China, DUV could become the backbone of a rising, self-sufficient semiconductor ecosystem.

As the stakes continue to rise, the outcome remains uncertain. Every workaround developed is a step toward independence for China, while for the US, the risk lingers that these efforts may undermine their grip on the semiconductor landscape.

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Original Text – https://www.tomshardware.com/tech-industry/semiconductors/china-bets-on-duv-as-euv-blockade-reshapes-chipmaking