'It's 10-15 years behind the West in chips

US and allied sanctions prevent ASML from selling its most advanced lithography equipment in China. Without ASML’s UVE and high-aperture UVE equipment, SMIC may stagnate at 3nm.

ASML CEO Christophe Fouquet is not the first expert to assess the Chinese integrated circuit industry. At the end of July, Gerald Yin Zhiyao, president and CEO

of AMEC (Advanced Micro-Fabrication Equipment China), one of the largest Chinese companies designing and manufacturing integrated circuit manufacturing equipment, gave his opinion.

China’s chipmaking equipment was five to 10 years behind its top competitors in quality and reliability, he said. Zeng Liaoyuan, an associate professor of telecommunications engineering at Chengdu University of Technology and Electronics in China, predicted that China would need at least two decades to produce advanced semiconductors on par with its Western and Asian rivals.

Liaoyuan and other experts say China needs two decades to develop advanced lithography equipment, which is suspiciously close to ASML’s EUV photolithography machine. SMIC, China’s largest chipmaker, uses ASML’s deep-ultraviolet equipment and multiple patterning to make 7nm and possibly 5nm integrated circuits.

This semiconductor manufacturing strategy involves multiple passes to transfer the pattern onto the wafer to increase lithographic resolution. It works, but it raises chip prices and lowers production capacity. China cannot access ASML’s most advanced lithography equipment, which is a major issue. Because sanctions prevent Xi Jinping’s country from manufacturing cutting-edge integrated circuits.

Christophe Fouquet’s words support that. This executive told NRC Netherlands that “China is 10–15 years behind the West by banning extreme ultraviolet lithography equipment exports. This has a clear impact.” It is important to note that these words were spoken by the CEO of a company that cannot sell its best chip manufacturing machines to Chinese clients due to US and Dutch sanctions.

A few months before leaving ASML as CEO, Peter Wennink predicted that the November 16, 2023 sanctions would cost his company 15% of its China sales. The current tension between China and the US and its allies is bad for ASML, NVIDIA, AMD, Tokyo Electron, and others. As we saw, experts agree that China’s semiconductor industry is at least a decade behind the US, Taiwan, South Korea, and Japan.

China’s tech firms faced a new frontier in 2020 when the US restricted access to advanced semiconductor technologies. These restrictions have increased in recent years, forcing local manufacturers like SMIC to innovate. The head of toolmaker ASML says China’s chip industry is 10 to 15 years behind, despite concerns that it would quickly circumvent the restrictions.

The latest sub-5nm silicon nodes require EUV (extreme ultraviolet) lithography tools like the one above, but Chinese chipmakers use DUV. As the leading toolmaker, ASML was an early target of US trade restrictions.

The US government successfully lobbied to limit ASML’s exports to China starting in 2020. Recently, the Netherlands has imposed more restrictions, making it harder for Chinese firms to replace their chipmaking equipment. In a new interview with ASML CEO Christophe Fouquet, China’s lack of EUV systems ensures it will struggle to compete with the West.

The Dutch publisher NRC reported that Fouquet said China would fall 10 to 15 years behind the West by banning EUV exports. Before recently, ASML could sell DUV systems like the Twinscan NXT:2000i. SMIC modified these devices to make 7nm chips, and some reports say 5nm is possible. Huawei, once the smartphone market leader, now uses SMIC’s 7nm chips, which slow down devices like the Mate 70.

‘It’s 10-15 years behind the West in chips

By knl9j

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