China's New DUV Lithography Machines Mark A Major Shift In The Chip War

You've probably read stories about China's home-grown CPUs and GPUs, which generally trail the world's leading designs in performance. That's in part due to Chinese chip designers lacking design history to iterate on, but it's also in part because China's chipmakers have been locked out of the most advanced semiconductor manufacturing equipment thanks to US-led restrictions on leading-edge chip fabrication tech. China has been catching up fast, though, and now, the country has its own, mostly home-grown DUV manufacturing machines according to a report by The Information.

If you read that, and you're thinking "isn't the leading edge EUV now?" the answer is yes. However, it's not as if DUV tech suddenly became obsolete just because it's no longer the latest technology. Many of the chips in your desktop or laptop may well have been fabricated using DUV technology, which was used for processes as recent as 7nm at TSMC. Thanks to multi-patterning techniques, SMIC has used DUV fabrication (with ASML equipment) to produce chips with an even smaller gate pitch than Intel's 18A processors, though the approach is far more expensive and inefficient than using EUV, and also doesn't offer any of the other benefits of newer fabrication processes.

The more notable part of the story is that these machines are designed and built in China, with funding secured through the Chinese government. The report says that a Shanghai-based state-backed entity has consolidated immersion DUV teams across multiple Chinese companies under a national effort coordinated with Huawei. The prototypes of the new tech went to a few foundries last year, but the story now is that the project has moved from prototypes into early production, with the first machines expected to enter Chinese fabs for evaluation and manufacturing use. Output is apparently planned at approximately 5 units this year, and roughly 20 units next year.


Now, compared to Dutch market leader ASML, that's paltry. ASML shipped 131 immersion DUV systems last year alone, so China's domestic volume remains tiny and doesn't really pose an immediate commercial threat to ASML's market position. There are other issues, too; the report notes that the machines rely on critical components supplies by vendors outside of China (most notably from Japan), and that the tools trail ASML's equivalent hardware in performance, reliability, and build quality.

Also, there are still many questions: how fast can the homegrown Chinese DUV system produce wafers, and what level of lithography can it really achieve? It's unlikely that these machines will compete with ASML hardware in terms of speed or quality, making them less desirable for producing processors, but they might be just fine for producing chips like DRAM, SSD controllers, and other support chips, alleviating bottlenecks within the Chinese tech industry. Remember, the last time we faced a major GPU shortage, it wasn't because GPU chips themselves were in short supply, but because of shortages for power delivery components.

In the short term, there seemingly aren't enough machines being produced to have much immediate effect on the chip market. However, in the mid-to-long term, we might see the emergence of a parallel semiconductor supply chain aimed less at beating TSMC at the bleeding edge and more at ensuring it can keep producing the enormous volume of mature-node chips that power everything from cars to consumer electronics. Even if ASML equipment continues to be used to produce $30,000 AI chips, Chinese fabs like CXMT and SMIC will have the tools to keep building motherboards and RAM for the rest of us. Hopefully that's how things actually play out, because paying $500 for 32GB of RAM is getting real old.