Updated US export controls on China-bound chip-making tools are expansive, covering a wide range of front-end equipment that could threaten the country’s mature semiconductor production, analysts say.
In a 121-page document published by the US Bureau of Industry and Security on Wednesday, lithography equipment capable of making chips on a 45-nanometre node or less were added to the list of controlled items, along with advanced tools for etching and film deposition.
ASML’s 1980Di was launched by the Dutch firm in 2015 and enables chip production at 40-nm and below, capable of making 275 wafers per hour. Designed to accommodate “mix and match” use with extreme ultraviolet (EUV) lithography, it has become an industry workhorse for many Chinese fabs in both advanced and mature semiconductor manufacturing.
“In principle, the 1980Di would fall under the [latest] export control restrictions,” said ASML CEO Peter Wennink during the call. “But only when [they] are used for advanced semiconductor manufacturing.”
Chinese chip makers can still access critical ASML equipment for four months
Chinese chip makers can still access critical ASML equipment for four months
Wennink said the new US restrictions will only apply to a handful of Chinese fabs involved in advanced semiconductor manufacturing, and will exclude the vast majority of its Chinese customers.
ASML said in a separate statement it would seek further clarification of the new rules from the US government.
“It potentially further limits what ASML can sell to China,” said Jan-Peter Kleinhans, director of technology and geopolitics at Stiftung Neue Verantwortung (SNV), a Berlin-based think tank.
“It’s especially noteworthy that the US government has gone ahead with [more] lithography controls just four months after the Dutch government established their own. The governments obviously differ in their risk assessments,” added Kleinhans.
China accounted for 46 per cent of ASML’s total sales of lithography units in the third quarter. The country has already pivoted towards mature chipmaking amid a wave of US trade sanctions that have restricted its access to advanced US-origin chips and equipment.
An ASML engineer, who declined to be identified due to the sensitivity of the matter, told the Post that if 1980Di machines are banned, the impact on China-based foundries would be much bigger.
Semiconductor Manufacturing International Corp (SMIC) is the only Chinese fab capable of making chips on advanced nodes. The country’s leading foundry has been tight-lipped after some industry analysts said it was behind a 7-nm grade system used to build the chip that powers Huawei Technologies’ latest 5G-capable Mate 60 Pro handset.
Restricting access to advanced chip-making tools has been a key tactic in Washington’s efforts to restrict China’s domestic semiconductor industry. Under previous sanctions the country has already been banned from importing ASML’s EUV lithography machines, the world’s most advanced, since 2019. These tools are necessary for commercially-viable chip fabrication below 7-nm.
And under export controls imposed by the Dutch government, starting from January 2024 ASML will be unable to ship its 2000-series deep ultraviolet (DUV) immersion lithography systems to China, in another blow to the country’s foundry expansion plans.
After the US restrictions imposed in October 2022, aimed at capping China’s chip-making processes at 14-nm, Chinese fabs have accelerated a move to mature node capacity. SMIC is building three 28-nm mature node foundries in Beijing, Shanghai and Shenzhen.
China’s combined mature chip-making capacity is expected to grow from 29 per cent this year to 33 per cent by 2027, according to a research note by TrendForce. Leading the charge are giants like SMIC, HuaHong Group and Nexchip. The mature chip market share of Taiwan – home to the world’s leading foundry Taiwan Semiconductor Manufacturing Co – is forecast to drop to 42 per cent from 49 per cent over the same period.