China’s reported development of its own extreme ultraviolet (EUV) lithography machine to make advanced semiconductors for artificial intelligence and high-performance computer systems could provide a “massive” boost to the country in its tech rivalry with the United States, according to analysts.
Scientists at a high-security Shenzhen laboratory earlier this year built “what Washington has spent years trying to prevent”: a prototype EUV lithography machine, according to a Reuters report on Thursday.
It was built by a team of former engineers from Dutch firm ASML, the world’s leading supplier of photolithography machines that etch circuit patterns onto silicon wafers to create chips. They reverse-engineered ASML’s EUV machine using parts from older ASML machines obtained in secondary markets, the report said, citing two people with knowledge of the project.
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“If successful, China will massively increase its geopolitical leverage on the US,” said Gary Ng, a senior economist for the Asia-Pacific at Natixis Corporate and Investment Bank. “The priority for mastering EUV technology will be its use in defence.”
China’s potential breakthrough underscores how EUV machines sit at the core of the US-China tech war, and command of that technology would show that Beijing was closer to achieving its goal of semiconductor self-sufficiency years ahead of what the West had anticipated.
“As the semiconductor dream has become a national security issue, I would not underestimate China’s ambition and its all-in approach to reverse-engineering EUV machines,” Ng said.
China looks to master extreme ultraviolet lithography technology to bolster its capability in producing advanced semiconductors. Photo: Shutterstock alt=China looks to master extreme ultraviolet lithography technology to bolster its capability in producing advanced semiconductors. Photo: Shutterstock>
While China’s prototype EUV machine was yet to produce working chips, the government has set a goal to make advanced integrated circuits on that equipment by 2028, according to the report, citing two people with knowledge of the matter. “But those close to the project say a more realistic target is 2030”, the report said.
EUV systems are indispensable for the production of powerful chips at the 3-nanometre and lower process nodes. The smaller the circuits produced, the more powerful the chips.
ASML remains the sole chipmaking equipment supplier to design, manufacture and sell EUV lithography machines. US-led sanctions, however, have barred the company from selling those machines to China since 2019.
“EUV systems are extremely complex, built from hundreds of thousands of parts across multiple geographies, with no single blueprint,” ASML said on Friday. “They rely on decades of expertise and intellectual property that is deeply embedded across a unique global supply ecosystem.”
That assessment reflected how China still had a long way to go to potentially rival machines made by ASML, and establish an advanced ecosystem of suppliers and experts.
Mastering EUV technology was the greatest challenge in the realm of deep submicron chip manufacturing, dwarfing other areas in the process, according to Patrick Liao, an independent Taiwan-based semiconductor analyst at Smartkarma.
Liao cautioned that it was still too early to determine if China was close to having full mastery of the technology.
ASML engineers walk past an extreme ultraviolet lithography machine still in production at the company’s headquarters in Veldhoven, the Netherlands, on November 20, 2023. Photo: ASML alt=ASML engineers walk past an extreme ultraviolet lithography machine still in production at the company’s headquarters in Veldhoven, the Netherlands, on November 20, 2023. Photo: ASML>
“Even if China were able to produce some EUV light [from its prototype], turning this into an economically viable manufacturing process could take years, if not decades,” Morningstar analyst Javier Correonero wrote in a research note on Thursday.
China’s EUV efforts are up against “arguably the best supply chain integration ever built”, Correonero said, pointing out ASML’s advantage.
Beyond high-end optics, he said ASML’s EUV machines contain “ultraprecise mechatronics” – the integration of mechanical engineering and computer science, alongside advanced vacuum systems, metrology and software.
“Producing a laboratory-scale EUV chip with unlimited trial-and-error cycles is incomparable to doing it at a leading TSMC fab,” Correonero said, referring to Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker.
According to a research paper published in March, former ASML head scientist Lin Nan led a group of engineers in developing an EUV light source platform that operates at internationally competitive parameters, which offered hope to domestic production of advanced integrated circuits. Lin was among the engineers involved in building the prototype EUV machine in Shenzhen, according to the Reuters report.
Chinese lithography systems maker Shanghai Micro Electronics Equipment, according to a patent filed in March 2023, had also made progress in EUV radiation generators and lithography equipment.
China’s market for lithography machines was 99 per cent controlled by ASML and Japanese suppliers Nikon and Canon.
China manages to meet around 2 per cent of the domestic demand for process control tools in chipmaking from local suppliers, according to TechInsights data. That percentage on the lithography side was about 1.5 per cent, and about 10 per cent on the entire wafer fab equipment sector.
Apart from lithography, China has yet to achieve self-sufficiency in segments including metrology and inspection, which are essential processes for quality control, measuring product dimensions and improving manufacturing yield and profitability, according to Boris Metodiev, who leads the manufacturing analysis team at TechInsights.
The EUV systems development in Shenzhen “does not mean that China has a volume-ready tool that can produce 2-nm and below chips”, Metodiev said. “To increase yield and throughput, it would take thousands or millions of hours of feedback from running the tool.”
Meanwhile, China is also exploring ways to use deep ultraviolet (DUV) technology to effectively bypass the restrictions on EUV. Shenzhen-based telecommunications equipment manufacturer Huawei Technologies had attempted to use older DUV machines and the technique of self-aligned quadruple patterning to reach 2nm-class performance, according to a patent filed in 2022.
Reuters said Huawei played a role in the prototype EUV project. Huawei did not immediately respond to a request for comment.
