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The semiconductor industry is one of the most dynamic and promising industries in the world, and chips are the core components of the semiconductor industry. The production and use of chips involves various fields, such as communications, computing, artificial intelligence, automobiles, medical care, etc., which are crucial to the country's economic development and national defense security. However, the manufacturing process of chips is very complex and precise, requiring high-end equipment and technical support, the most critical of which is the lithography machine.
The lithography machine is a device used to depict circuit patterns on wafers, and its performance determines the process level and integration of the chip. Currently, only ASML (Esmoore) in the Netherlands is capable of producing state-of-the-art EUV (extreme ultraviolet) lithography machines for advanced chip manufacturing processes of 7nm and below. In addition to ASML, Japan's Tokyo VI and Nikon are capable of producing DUV (Deep Ultraviolet) lithography machines for mature chip manufacturing processes at 14nm and above.
As the world's largest chip consumer and importer, China's demand for high-end chips far exceeds its supply. In order to realize the independent controllable and development of the chip industry, the Chinese government and enterprises are constantly investing funds and manpower in technology research and development and production construction. Among them, SMIC, as China's largest integrated circuit manufacturer, has achieved mass production on the 14nm process and is moving towards the 7nm process. However, in the process, China also faces restrictions and sanctions from Western countries such as the United States. The United States not only bans the export of advanced chips to China, but also prevents its allies from selling advanced lithography machines to China. Recently, the Netherlands officially announced that it will restrict shipments of high-end DUV lithography machines to China from September 1, which has brought new challenges to the Chinese chip industry.
This paper will discuss the challenges and opportunities facing China's chip industry by analyzing the statements of ASML and SMIC after the Netherlands restricted the export of lithography machines to China, as well as the development of China's chip industry.
The Netherlands restricts the export of lithography machines to China
The Netherlands is the only country in the world that can produce EUV lithography machines, and it has ASML, a lithography machine giant that occupies more than 80% of the global market share. ASML is not only one of the world's largest semiconductor equipment suppliers, but also one of the most important semiconductor equipment partners in China. According to data released by ASML, 25% of its revenue in 2020 came from the Chinese market, with orders exceeding 60 billion yuan. Among them, ASML has sold several DUV lithography machines to China for the production of mature chips of 14nm and above. ASML also plans to ship EUV lithography machines to China in 2023 for the production of advanced chips of 7nm and below.
However, ASML's plan was strongly opposed by the United States. The United States believes that the sale of advanced lithography opportunities to China threatens the national security and technological superiority of the United States, so it has been pressuring the Dutch government not to approve ASML's export of EUV lithography machines to China. The United States also joined Japan and the Netherlands in reaching an agreement on semiconductors in Washington on January 27, 2022, under which Japan and the Netherlands will implement some of the controls required by the U.S. government and have already initiated the export of semiconductor equipment to China. One of the most notable is that Dutch lithography giant Esmoore may have agreed not to sell DUVs to China that manufacture mature process wafers, which is expected to slow down the pace of China's own manufacturing chips. This also means that it will expand the scope and category of chip manufacturing equipment that is currently prohibited from shipping to China, from high-end chip equipment to low- and medium-end chip equipment with mature processes.
The Dutch government officially announced the decision on June 30, restricting shipments of high-end DUV lithography machines to China from September 1, and trading can only be obtained with government permission. This means that ASML will not be able to deliver pre-ordered DUV lithography machines on time to Chinese customers such as SMIC, which are critical to the development of China's chip industry.
SMIC independently developed and expanded production
SMIC is the largest integrated circuit manufacturer in China, with multiple 12-inch fabs and 8-inch fabs in Shanghai, Beijing, Tianjin, Nanjing, Suzhou and other places. SMIC provides foundry services to customers around the world at all process levels, from 0.35 microns to 14 nanometers. Among them, the 14nm process is SMIC's most advanced process level, which has achieved mass production and is moving towards 7nm process.
SMIC has made a major breakthrough in the 14nm process by using FinFET (three-dimensional transistor) technology, which can improve the performance and efficiency of chips, reduce power consumption and cost. SMIC began mass production of 14nm FinFET chips in 2020 and achieved mass production of 14nm FinFET Plus chips in 2021. These chips are mainly used in mobile communications, Internet of Things, artificial intelligence and other fields. SMIC also plans to achieve mass production of 14nm FinFET Pro chips in 2022 to meet the demand for higher performance and lower power consumption.
SMIC has not only made progress on the 14nm process, but is also actively promoting the development and production of the 7nm process. The 7nm process is one of the most advanced in the world, which can greatly improve the performance and integration of chips, reduce power consumption and cost. SMIC announced the start of R&D on the 7nm process in 2020 and completed the first trial production of 7nm FinFET chips in 2021. SMIC also plans to achieve mass production of 7nm FinFET Plus chips in 2022 and 7nm FinFET Pro chips in 2023. These chips will be used in high-end mobile communications, high-performance computing, cloud computing, artificial intelligence and other fields.
SMIC is not only expanding its production scale, but also innovating in technology research and development. SMIC has a strong R&D team and laboratories, and cooperates with many well-known semiconductor companies and institutions around the world to jointly develop new technologies and processes. SMIC also actively participates in national and local science and technology projects and policy support to obtain additional technical resources and financial support. SMIC also focuses on talent training and introduction, and has established cooperative relationships with many universities and research institutions to train more professionals for the semiconductor industry.
Although the development of China's chip industry has made remarkable achievements, it also faces many challenges. One of the biggest challenges is restrictions and sanctions from Western countries such as the United States. The United States and other Western countries not only prohibit the export of key equipment such as advanced chips and lithography machines to China, but also try to interrupt China's cooperative relations with other semiconductor companies and institutions around the world, hindering China's access to more technical resources and market opportunities. These restrictions and sanctions have caused great difficulties and pressure on the development of China's chip industry.
However, there are also opportunities in the midst of challenges. The Chinese government and enterprises have realized the importance of independent control and self-reliance, increased investment and support for the semiconductor industry, accelerated the pace of technology research and development and innovation, improved production capacity and quality level, and expanded market demand and application fields. China is also actively cooperating with other developing countries to jointly promote the globalization of the semiconductor industry and contribute to the diversification and balance of the global semiconductor industry.
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