China's push for semiconductor self-sufficiency is accelerating, but the country is unlikely to catch up with ASML's technology within the next decade, according to a new forecast. Extreme ultraviolet (EUV) lithography machines are essential for producing advanced chips, including those used in Nvidia processors, and Dutch supplier ASML is the world's only maker of them. Blocked from buying the machines under U.S.-led export controls, China has thrown its full weight behind developing its own.
UBS Group said in a report on the 2nd that China will struggle to develop equipment capable of replacing ASML's EUV lithography technology within 10 years, Bloomberg reported. "China appears to be at a stage similar to ASML in 2004," analyst Francois-Xavier Bouvignies wrote in the report. Citing patent activity centered on light sources and laser subsystems, the analyst team said China's technology shows a level of maturity comparable to ASML 15 years before it began mass-producing EUV machines.
UBS did expect China to gain the ability to mass-produce immersion deep ultraviolet (DUV) lithography machines within two to five years. "Given the likely gap in yield and throughput versus ASML and the regulatory constraints, Chinese-made lithography tools are unlikely to be used outside China," UBS said, adding that "uncertainty remains because information on the tools' performance and the capabilities of China's semiconductor supply chain is limited."
The Chinese government has poured vast amounts of state capital into achieving semiconductor self-sufficiency. The country's chip industry has set a goal of raising its self-sufficiency rate to 80% by 2030 from about 30% now, a target that includes localizing advanced equipment.
The funding channel is the National Integrated Circuit Industry Investment Fund, known as the Big Fund. It has raised money in several rounds since the first in 2014, with the most recent third round totaling 344 billion yuan (about 70 trillion won). The money is being concentrated in foundry SMIC, Changxin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC).
ASML Widens Gap With High-NA, Barred From Selling EUV to China
ASML holds a monopoly on EUV lithography machines and leads the industry in ultra-fine chip process technology. It has recently developed High-NA and Hyper-NA EUV technologies that surpass the performance of existing EUV machines, continuing to push the limits of ultra-fine processes and widen its technological lead. ASML is barred by regulation, however, from selling EUV machines to China, one of its largest markets.
China is struggling to obtain the most advanced equipment but is closing the gap faster on the back of large-scale investment. The patent activity in light sources and laser subsystems cited by UBS points to efforts to develop EUV machines domestically. At the same time, the country is delivering visible results, including entering mass production of immersion DUV lithography tools. DUV, however, still cannot match EUV in drawing the finest circuit patterns. EUV processes reduce the number of steps required, lifting productivity and enabling high-performance chips.
Immersion DUV machines are less advanced than EUV but remain essential to chip production, using light to etch fine circuit patterns onto silicon wafers. ASML prices its immersion DUV machines at close to $90 million, while EUV machines cost more than $200 million each.
