I’ve previously talked about China’s difficulties in catching up to the west in semiconductor manufacturing here, here, and here, among other places. To summarize: Western nations have an advanced, highly interconnected semiconductor manufacturing ecosystem that China doesn’t have the technical expertise to replicate. In particular, China has nothing like ASML’s extreme ultraviolet lithography machines (AKA a “stepper”) necessary to build the most advanced chips with the smallest feature geometries.
Though advancements that SMIC and Huawei have made in the semiconductor sector in recent years are pretty impressive, the companies are 10 to 15 years behind industry giants like Intel, TSMC, and Samsung, said Christophe Fouquet, chief executive of toolmaker ASML. It’s well known that even with the best-in-class DUV tools, Chinese fab SMIC will be unable to match TSMC’s process technologies cost-effectively. This is because Chinese companies cannot access leading-edge EUV lithography tools.
“By banning the export of EUV, China will lag 10 to 15 years behind the West,” said Christophe Fouquet in an interview with NRC (machine translated). “That really has an effect.”
ASML has never shipped its EUV tools to China due to the Wassenaar Arrangement, despite SMIC’s reported order for one EUV machine. The details remain unclear, but ASML did not deliver the machine to the Chinese foundry due to US sanctions. However, ASML kept shipping advanced DUV lithography tools, such as the Twinscan NXT:2000i, which are capable of producing chips on 5nm and 7nm-class process technologies.
As a result, SMIC has been producing chips for Huawei using its 1st-generation and 2nd-generation 7nm-class process technology for years now. This has certainly helped the Chinese high-tech giants weather U.S. government sanctions.
Having understood that EUV tools are not coming to China, Huawei and its partners have explored extreme ultraviolet lithography themselves with the aim of building their own lithography chipmaking tools and ecosystem, which will take 10 – 15 years at best. For reference, it has taken over 20 years for ASML and its partners from foundational work to complete commercial machines to build the EUV ecosystem.
China thought it had found a way out of the western ban on high end lithography machines. Turns out: Not so much.
“In the past two years, China has spent a staggering 8 billion euros to procure fewer than 120 Advanced immersion DUV lithography machines from Dutch company ASML.” DUV (Deep Ultraviolet) was the generation of machines before EUV, and can’t effectively pattern features of less than 10nm.
“On the surface this seemed like a bold and extravagant move. However, as of September 7th, the reality has turned into a bitter irony. Maintenance and upgrades for these machines are now completely restricted. In other words, starting next year these state-of-the-art [not quite – LP] lithography machines could become little more than scrap. To make matters worse, even repairs for older equipment are off the table.”
“Lithography machines are the backbone of semiconductor manufacturing, etching intricate circuits onto silicon wafers. Without proper maintenance and upgrades, these machines, worth tens of millions of euros each, will gradually deteriorate into expensive junk. Producing advanced chips smaller than 14 nanometers will become nearly impossible. Yield rates will plummet and costs will skyrocket.”
“Even TSMC, a global benchmark, requires ASML engineers to be stationed on site for regular recalibrations every 3 to 6 months. Earlier this year, an earthquake in Taiwan caused TSMC’s lithography operations to halt, and it took a month of recalibrations to resume lithography.” Requalification is indeed a huge pain in the ass.
“Machine maintenance depends on ASML proprietary components, software and technical support. Hiring a few engineers, or even the CEO of ASML, won’t solve the fundamental complexities of this highly specialized system. China’s attempts to rely on sheer manpower to bridge this gap are wishful thinking.”
“Thinking a few engineers could crack this technology is simply laughable. Lithography machines are just the tip of the iceberg in the complex semiconductor manufacturing supply chain.”
“China owns nearly 1,400 ASML lithography machines. With Western restrictions on maintenance spare parts and engineering services, these multi-million euro machines have been reduced to a rob Peter to pay Paul situation keeping them operational for just one more day at a time. Chip production is bound to shrink, creating a vicious cycle.”
“New sanctions implemented in September have blocked sales of models like the NXT1970i, shutting down access to both hardware and technology. At best, China’s capabilities remain stuck at the level of ASML’s older NXT 1470 machines, which date back to the early 2000s.”
“China’s so-called domestic lithography machines are limited to 65 nanometer dry DUV technology, with some reports claiming they can reach 55 nanometer. However, this is equivalent to ASML 2006-era technology, putting China 18 years behind. Worse, key components for these domestic machines still rely on suppliers from Japan and Germany.”
“China’s domestic lithography machines are largely a symbolic effort, more about saving face than actual technological advancement.”
There’s no way China can catch up to ASML in EUV lithography, and no way they can eliminate their deep dependence on western semiconductor manufacturing technology.
“Cutting edge EUV systems have been banned from China since 2019. Last June, high-end immersion DUV machines were added to the list. Now even older models like the NXT 1970i and 1980i can’t be sold or upgraded. China’s ambitions have been crushed, reducing it to square one.”
“This February, the Dutch Minister of Trade openly stated that China uses foreign high tech knowledge to advance its military capabilities, and ASML tools could produce sophisticated weapons. Handing over lithography machines to China is akin to arming an adversary, a move unacceptable on any strategic level.”
Without western technology, China’s desire for a technologically advanced semiconductor industry are dead in the water.
“The myth of China’s technological rise is unraveling and heading toward decline.”
When you buy a piece of high-end semiconductor equipment, you’re not just buying the machine, you’re buying the knowledgebase of deep technical expertise of both the on-site technical staff, as well as the process wizards back in Eindhoven, Santa Clara and Tokyo. There are inumerable parameters that need to be just right, and you need to know how to tweak them if the yield goes south. Without that expertise to guide you, the high end machines quickly become worthless.
I can imagine President Trump offering China a grand bargain, in which they stop stealing western technology, stop committing genocide against the Uighers, stop clashing with Philippine ships in the South China Sea, meet its treaty obligations regarding Hong Kong, and let international agencies inspects its high level bioweapon labs in exchange for easing semiconductor sanctions.
I doubt China would take such a deal, as it would be too humiliating for Xi to stand. But I can imagine Trump making it…
This entry was posted on Thursday, December 26th, 2024 at 5:45 PM and is filed under Communism, Foreign Policy, video. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
There is no way I would trust the PRC to honor any deal made with them (especially the one in 2nd to last paragraph). They seem to think deals are merely pulling the wool over the eyes of their opponents.
Have to agree with pbar here. Contracts and treaties with the Chinese are strictly tactical moves on their part, intended to advance their agenda. They have no concept of “win-win” for both sides, and feel entitled to come out on top in every interaction with the West. It is best that we plan accordingly.
These sanctions do not affect PLA weapons production. Military and radhard chips are typically 100 nm or greater., which is well within the capabilities of the domestic China semiconductor lithography machines. Keep in mind that our most successful smart weapon, the Tomahawk cruise missile, was (and still is) engineered with micron level spacing chips.
China retaliated on December 3rd by prohibiting exports of gallium, germanium, antimony and graphite to the United States. They supply half to 100% of these critical electronic elements to our domestic industries. The price of antimony has since doubled. Products affected include shotgun shot and other ammunition components, notably primers.
The Chinese Commerce Ministry will probably extend these export bans to our allies (hint: the EU and Taiwan) in the new year, at which point the techies will be seriously affected.
China would also need to establish the vendor chains to supply the ultra pure gases and chemicals, the lithography masks and the precise mixture ratio for the slurries used to polish the interlaced metal connections without any corrosion (copper will even start to corrode upon exposure to air).
10x25mm is correct about the chips used in weapons. They rarely use bleeding edge devices. But should Red China’s military need cutting-edge devices (e.g., for supercomputers) they could still fabricate them in very limited quantity without ASML’s deep UV and extreme UV steppers. (Hint: Electron beam lithography comes to my mind first. There are also other nanometer scale patterning technologies which have been sidelined in the West.)
Developing the supply chains for all the auxiliary technologies UV steppers (and all the other cutting-edge fabrication steps of state-of-the-art chips) depend on is largely a matter of political will, technological talent, and time. Red China has the first two and when those are deployed at scale the time required will take care of itself.
The USA has now given Red China a yuuge incentive to leap forward technologically in integrated circuits. I’m old enough to remember what a shock Red China’s successful effort to build nuclear weapons was to the USA. That “10 year” gap will evaporate more quickly that most realize.
One more thing. Red China’s people aren’t stupid. Why let a fleet of 120 deep UV (DUV) steppers rot when they could hold a few back and sell the remainder for export? Flooding the small world market for DUV steppers would put a serious crimp in ASML’s sales revenue for several years.
There is no way I would trust the PRC to honor any deal made with them (especially the one in 2nd to last paragraph). They seem to think deals are merely pulling the wool over the eyes of their opponents.
Great article, as usual.
Have to agree with pbar here. Contracts and treaties with the Chinese are strictly tactical moves on their part, intended to advance their agenda. They have no concept of “win-win” for both sides, and feel entitled to come out on top in every interaction with the West. It is best that we plan accordingly.
“They seem to think deals are merely pulling the wool over the eyes of their opponents.”
Funny. You could say the same thing about the USA.
These sanctions do not affect PLA weapons production. Military and radhard chips are typically 100 nm or greater., which is well within the capabilities of the domestic China semiconductor lithography machines. Keep in mind that our most successful smart weapon, the Tomahawk cruise missile, was (and still is) engineered with micron level spacing chips.
China retaliated on December 3rd by prohibiting exports of gallium, germanium, antimony and graphite to the United States. They supply half to 100% of these critical electronic elements to our domestic industries. The price of antimony has since doubled. Products affected include shotgun shot and other ammunition components, notably primers.
The Chinese Commerce Ministry will probably extend these export bans to our allies (hint: the EU and Taiwan) in the new year, at which point the techies will be seriously affected.
[…] ASML Exits, China Screwed. “Western nations have an advanced, highly interconnected semiconductor manufacturing […]
China would also need to establish the vendor chains to supply the ultra pure gases and chemicals, the lithography masks and the precise mixture ratio for the slurries used to polish the interlaced metal connections without any corrosion (copper will even start to corrode upon exposure to air).
10x25mm is correct about the chips used in weapons. They rarely use bleeding edge devices. But should Red China’s military need cutting-edge devices (e.g., for supercomputers) they could still fabricate them in very limited quantity without ASML’s deep UV and extreme UV steppers. (Hint: Electron beam lithography comes to my mind first. There are also other nanometer scale patterning technologies which have been sidelined in the West.)
Developing the supply chains for all the auxiliary technologies UV steppers (and all the other cutting-edge fabrication steps of state-of-the-art chips) depend on is largely a matter of political will, technological talent, and time. Red China has the first two and when those are deployed at scale the time required will take care of itself.
The USA has now given Red China a yuuge incentive to leap forward technologically in integrated circuits. I’m old enough to remember what a shock Red China’s successful effort to build nuclear weapons was to the USA. That “10 year” gap will evaporate more quickly that most realize.
One more thing. Red China’s people aren’t stupid. Why let a fleet of 120 deep UV (DUV) steppers rot when they could hold a few back and sell the remainder for export? Flooding the small world market for DUV steppers would put a serious crimp in ASML’s sales revenue for several years.