The biggest blow for China will come in January 2024 and aims to bring its chip industry to collapse
China’s semiconductor industry just had a big hit . The US and its allies continue to be displeased by the launch of Huawei’s Mate 60 Pro smartphone equipped with a Kirin 9000S SoC. The sanctions promoted by the US Government since 2019 should have prevented SMIC ( Semiconductor Manufacturing International Corp ), the largest Chinese chip manufacturer , from producing such an advanced 7nm processor. But, despite the prohibitions, he has manufactured it.
Some experts in the semiconductor industry, such as Tilly Zhang, who is an analyst at the Chinese consulting firm Gavekal Dragonomics, argue that it is plausible that SMIC has found a way to optimize its deep ultraviolet (UVP) lithography equipment to manufacture cutting-edge chips. According to this expert, the UVP machines manufactured by ASML and that are in the possession of some Chinese integrated circuit manufacturers can be used to produce 5 and 7 nm semiconductors.
The year that I mentioned a few lines above, 2019, is important because it marks a turning point in the relationship between China and the United States. That year, the US Administration took the necessary steps to prevent ASML’s most advanced lithography equipment , the extreme ultraviolet (EUV) machines , from reaching Chinese semiconductor manufacturers. However, shortly afterwards another attack by the US-led alliance began to take shape. One that we know well and that will come into force in just three months.
UVP lithography equipment is about to go out of reach in China
Before moving forward, it is worth briefly reviewing why the US Government has the ability to exert such profound influence over the main manufacturers of lithography equipment, which, precisely, are not American. ASML is a Dutch company. And Tokyo Electron, Canon and Nikon are Japanese. It is evident that between the US, the Netherlands, Japan, South Korea and Taiwan, which are the main players in the semiconductor industry, there is an indisputable economic and geostrategic affinity.
But this is not all. It is also important that we take into account that the lithography equipment manufactured by ASML incorporates American technologies (without going any further, the ultraviolet light source of the UVE and UVP machines is produced by the Californian company Cymer ). And presumably the lithographic equipment from Tokyo Electron, Nikon and Canon as well, which gives the US the power to control which countries can use this technology. Herein lies to a large extent the right of veto that the US Administration has been exercising for years, and that it will certainly maintain in the future.
We have known for several months that the US-led alliance is devising the necessary steps to prevent ASML’s UVP equipment from continuing to reach Chinese companies. Precisely the machines that SMIC engineers seem to have optimized to be able to manufacture the 7nm Kirin 9000S chips are the Twinscan NXT:2000i devices , which are the ASML UVP devices that are in the possession of this integrated circuit manufacturer.
For China to stop receiving UVP photolithography equipment and having ASML’s UVE machines out of its reach is a problem. A serious problem. It is not yet clear that large-scale production of 7nm chips with the UVP equipment will be profitable , and it does not seem at all easy that SMIC engineers can refine these machines much further to produce 5nm semiconductors and beyond, which is what SMIC needs given the current situation.
As of January 2024, ASML will no longer deliver UVP equipment to Chinese companies, so Xi Jinping’s Government will only have two options: optimize the UVP machines in its possession to the maximum and pour all its resources into the development of its own cutting-edge lithography equipment. He is already doing it , but he has a lot of work ahead of him.
And it has it because the most advanced lithography machine that SMEE ( Shanghai Micro Electronics Equipment Group ) has ready, which is the public company that produces the most advanced chip manufacturing equipment in China, only allows developing 90 nm integrated circuits . This equipment has the commercial name SSA600/20 and cannot compete at all with the best lithography machines from the Netherlands or Japan.