ASML is a leading global semiconductor manufacturing equipment company headquartered in Veldhoven, the Netherlands. ASML is an important high-tech company focused on the design, manufacture and supply of semiconductor chip manufacturing equipment, especially lithography machines. Lithography plays a key role in semiconductor manufacturing, where patterns on chips are projected onto silicon wafers to create tiny electronic components and circuits. ASML is the world's largest manufacturer of lithography equipment, and its advanced lithography machines have an absolute monopoly position in the semiconductor industry. Therefore, all chip manufacturers in the world have to buy lithography machines from them, and China is of course among them, but it is currently limited by the US chip bill and has to impose a technology blockade on China, Chinese mainland it is currently impossible to purchase the most advanced extreme ultraviolet EUV lithography machine. This is despite the fact that Dutch ASML agreed in 2018 to supply EUV lithography equipment to SMIC, China's leading wafer foundry. Under pressure from the United States, the Dutch government has now ruled that the contract will never be fulfilled now.
The Dutch government's export control bill on lithography machines will come into effect from September 1 this year
The latest policy issued by the Dutch government will be more stringent, not only to ban the sale of the most advanced extreme ultraviolet EUV lithography machine (used to manufacture high-end chips of 7 nm and below) to China, but also to restrict the shipment of deep ultraviolet DUV lithography machine (used to manufacture 28 nm, 14 nm chips, which is also the current mainstream mature technology in China). As a result of these export control regulations, ASML is required to apply to the Dutch government for export licenses for all shipments of its state-of-the-art immersion DUV lithography system (TWINSCAN NXT: 2000i and subsequent immersion systems). The Dutch government will decide whether to grant or deny the required export licence and provide the company with further details on any applicable conditions. ASML claims to continue to comply with applicable export regulations, including Dutch, EU and US regulations.
The extreme ultraviolet lithography machines produced by ASML in the Netherlands are priced at up to 1 billion yuan each.
Foreign media: China's chip manufacturing autonomy is difficult
The Dutch government's export controls are limited to state-of-the-art lithography systems, which means that China can only buy other ASML older lithography systems. Therefore, foreign media feel that China's chip manufacturing will face great challenges. For example, Shanghai Microelectronics Corporation (SMEE), a Chinese manufacturer of lithography machines, will have to source key components locally. That would be difficult. IDTechX analyst Yu-Huan Chang said it would take SMIC, China's largest wafer foundry, seven years to catch up with today's technology leaders.
Limiting the export of chip raw materials, China is fighting back
In the face of the technological blockade of Europe and the United States, China has not sat still. On July 3, China will restrict exports of two key metals for making chips, gallium and germanium, in response to U.S., Dutch and Japanese restrictions on exports of some advanced lithography machine systems. Despite China's control of raw materials — for example, it accounts for 95 percent of global supply of raw gallium — chip companies have been relatively silent on upcoming restrictions in their most recent quarterly earnings reports. For example, leading European chipmakers such as NXP Semiconductors rarely mention China's impending raw material restrictions in earnings releases or follow-up analyst calls. ASML also said the measures would not have a "significant impact" on the company's 2023 outlook or long-term prospects.
But that doesn't mean there won't be any consequences.
Analysts at research firm Wood Mackenzie wrote in a report in early July that since gallium and germanium producers in China must seek export licenses, which largely depend on the rigor of the licensing process, the report is titled: "The Chip Wars: Signs of Things" to come? "If the licensing process restricts the supply of raw materials to chipmakers outside of China, this will affect downstream end-use markets, including electric vehicles," the report said. This is reminiscent of the chip shortages of 2020 and 2021, which led to increased waiting times for car deliveries. More worryingly, however, is that the current restrictions are just the beginning of a larger escalation of the trade war. Wood Mackenzie reported: "The concern is that this protectionism could escalate to other critical materials end industries. ”
ASML: China's self-developed lithography machine will destroy the global chip industry chain
ASML has always had concerns that these controls will allow China to accelerate the development of domestic lithography machines, and bluntly says that its manufacturing principle is the same in China. It is worth noting that ASML did not have this attitude at first, but believed that even if the lithography machine drawings were to be disclosed to China, China would not be able to build an advanced lithography machine. However, as the United States continues to increase restrictions and China's self-developed attitude, ASML is a little anxious, and takes the initiative to persuade the United States that restricting lithography machine shipments will lead to disruptions in the global supply chain, and China plays a very important role in this. The implication is that ASML is also worried that sooner or later China will solve the core technical problems of lithography machines, when it will not only lose the Chinese market, but also be passive in the global chip industry competition. Because Chinese mainland is the world's largest semiconductor market and one of the world's largest lithography machine markets, ASML must rely heavily on Chinese mainland market.
Recently, ASML claimed that China's independent development of lithography machines has destroyed the global industrial chain. However, this statement is clearly unreasonable. Because China independently developed it, it is precisely because it has been subject to the continuous increase in export control and restriction measures by the United States. Instead of accusing China of destroying the industrial chain, ASML should reflect on the responsibility of the Netherlands as an independent entity, rather than blindly following the decoupling policy of the United States, Japan and other countries towards China.
China is actively promoting the localization process of lithography machines
China has also greatly supported and invested in semiconductor-related industries in recent years. For example, Shanghai Microelectronics has achieved mass production of 90 nm lithography machines, although there is still a huge gap with the level of mainstream lithography machines, which also means that the horn to accelerate the process of domestic lithography machines has also been sounded. They are also promoting the research and development of more advanced lithography machines in an orderly manner, and sooner or later they will be able to get rid of their dependence on foreign lithography machines. It should be noted that in order to fully catch up with the current most advanced lithography technology level, China still needs to achieve full localization as soon as possible in some core technologies and key components, especially in terms of exposure light source (extreme ultraviolet light source), photoresist and mask. At the same time, the government should also invest funds and manpower to accelerate close cooperation with universities and scientific research units, and can also introduce relevant foreign high-tech talents.
Finally, it is also hoped that China will realize the complete autonomy of the lithography machine as soon as possible and reach the world's advanced level. ASML does not sell Chinese lithography machines now, and when China makes a final breakthrough in the future, it depends on China's willingness to sell.