US expands efforts to hamstring China’s chipmaking mojo

Beijing can't get next-gen lithography gear, America now trying to block sales of older machines

The US government is reportedly stepping up efforts to hamper China's ability to grow its semiconductor manufacturing capabilities by pressing for a wider ban on key chipmaking gear.

Uncle Sam hopes to convince officials in the Netherlands to block Dutch-native semiconductor equipment maker ASML from selling its older deep ultraviolet lithography (DUV) systems to China, according to a Tuesday report from Bloomberg that cited unnamed sources. US and Dutch officials declined to comment on the report, as did ASML.

DUV systems use a less advanced lithography process than ASML's extreme ultraviolet light (EUV) machines that chipmakers are increasingly turning to for leading-edge components coming to the market, such as Apple's homegrown M2 silicon for Macs or Nvidia's H100 datacenter GPU.

DUV systems are, meanwhile, still used to make many of today's chips, which power everything from phones and computers to cars and robots. And with ASML dominating the market for DUV systems, US officials are keen on cutting off China from the company's past-gen systems, namely the most advanced versions, which are called immersion lithography machines.

US officials are also trying to convince the Japanese government to halt sales of DUV systems from Japan-based Nikon, Bloomberg said.

China has been trying to amass DUV kit because the country hasn't been able to get its hands on ASML's EUV machines, according to a December report. This is problematic since ASML is the only company making such equipment.

ASML has been unable to ship EUV systems to China because the Dutch government has not granted the company a license to do so after facing pressure from — you guessed it — the United States.

SMIC, China's largest chipmaker, is among the country's semiconductor manufacturers trying to make bulk purchases of DUV systems from ASML. According to BusinessKorea's report, SMIC plans to invest $11 billion to grow its DUV capacity by 2023.

It's important to point out that while DUV systems are mainly used for older manufacturing processors with lower transistor densities like 30nm, semiconductor manufacturers can use multi-patterning techniques to make denser nodes, such as 10nm.

TSMC, for instance, relies on DUV for the first two generations of its 7nm nodes, though the Taiwanese foundry giant, like Intel and Samsung, are now focused on EUV for next-generation processes.

If the US is successful in halting the sales of ASML's DUV systems to China, the move could make sizable dent in the company's revenue since chip factories in the country accounted for 14.7 percent of ASML's 2021 sales, according to Bloomberg.

But a successful export ban could have a much bigger impact on China, significantly curtailing its efforts expand the country's semiconductor manufacturing footprint. The country has already been blocked from buying other kinds of advanced chipmaking equipment from other American companies, so this would make matters worse.

The ban would be considered a win for the US. The only trouble is, the move would more likely benefit Europe and other regions building out chipmaking capacity since the Western power is currently struggling to approve chip subsidies that companies like Intel are begging for. ®

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