ASML, the world’s largest chip-making equipment producer, will be barred from shipping a type of deep ultraviolet (DUV) lithography equipment to Chinese buyers if they intend to use it to make high-end semiconductors rather than mid-end ones.
ASML’s NXT:1980Di tool, which is not covered by Dutch export licensing rules, can now be restricted under the United States’s new export rule, ASML Chief Executive Peter Wennick said Wednesday. He added that only a small number of Chinese foundries will be affected by the new rule while most other chip makers in China can continue to purchase the DUV tool.
The Netherlands government imposed the export rule after China’s Semiconductor Manufacturing International Corp (SMIC) reportedly used ASML’s DUV lithography and its own N+2 processing technology to make 7nm chips for Huawei. The chip, called Kirin 9000s, debuted in Huawei’s Mate60 Pro phone in late August.
The NXT:1980Di was designed to make 38nm chips but it can produce 14nm and 28nm chips with multiple exposures to achieve a yield of more than 90%. ASML refers to it as “a high-productivity, dual-stage immersion lithography tool” on the company’s website.
ASML’s Nasdaq-listed shares fell 4.17% on October 18 after the US unveiled new curbs against Chinese chip makers on Tuesday.
Wennick said he expects demand from Chinese chip makers to remain strong although the US curbs will hurt ASML’s sales to China by 10-15%. He said shipments to China accounted for 46% of ASML’s total sales in the third quarter.
“I don’t think we will see a peak this year, I think there will be a significant amount of demand coming out of China for mature technology,” he said.
Different tools
The Dutch government said on June 30 that it will require ASML to apply for export licenses for shipments of its DUV lithography systems, including the NXT:2000i and subsequent immersion systems.
That means that NXT:1980Di, an older model, will still be available for Chinese chip makers. The effective date of the export rule was originally set for September 1 but was then pushed back to the end of this year.
But new disputes emerged after Huawei launched its Mate60 Pro on August 29.
US Commerce Secretary Gina Raimondo said on October 4 that reports of Huawei’s chip breakthrough were “incredibly disturbing” and said her department needs different tools and more resources to enforce the ban and close loopholes.
ASML was then required to stop shipping NXT:1980Di to Chinese foundries that intend to use the machine to make high-end chips.
Theoretically, the blacklisted SMIC and Huawei can still source NXT:1980Di from the secondary market to make 7nm chips but its production scale will be limited, some analysts said.
“Lithography is a pain point of China’s chip supply chain as it contains advanced optical and high precision parts that China cannot supply itself,” a Shanghai-based commentator using the pen name Zhu Ting says in an article. “There is a long way to go before China can completely self-supply its chip-making equipment.”
However, Zhu said chip makers such as SMIC and Huahong Grace Semiconductor Manufacturing Corp have taken the initiative to place orders to local suppliers over the past few months in anticipation of more US curbs.
She says local suppliers such as Advanced Micro-Fabrication Equipment Inc and Naura Technology Group Co Ltd have benefited from this trend although they don’t make lithography.
E-sports fans
The new round of US export controls against China’s chip sector also include an export ban on advanced artificial intelligence (AI) chips and the sanctioning of 13 Chinese AI chip design firms and distributors.
The US Commerce Department said it will add Beijing Biren Technology and Moore Thread Intelligent Technology and their related firms to its “Entity List” as their AI chips can allegedly be used to develop “weapons of mass destruction, advanced weapons systems, and high-tech surveillance applications that create natural security concerns.”
Both Biren and Moore Thread said they strongly opposed the US decision.
On Tuesday, US chip maker Nvidia said in a stock exchange filing that it will be banned from shipping A800, H800, L40, L40S and RTX 4090 chips to China. The new rules, which will come into effect in 30 days, will also cover its DGX and HGX systems.
Media reports said the new US export rules will also ban the sales of Intel’s Habana Gaudi 2 and AMD’s Instinct MI300 to China.
The Semiconductor Industry Association, which represents US chip makers, said the US curbs may encourage overseas customers to look elsewhere.
Chinese technology giants including Baidu, Alibaba and Tencent have recently ordered US$5 billion worth of A800 chips from Nvidia, the Financial Times reported on August 8.
While the export ban of A800 and H800 chips was well-expected, China’s e-sports fans were shocked that the shipment of RTX 4090, one of their most favorite graphic cards, was also banned.
On Wednesday, some retailers priced their RTX4090 inventory at 50,000 yuan ($6,837) each, compared with an official price of about 13,000 yuan.
Read: US to deepen chokehold on China’s AI chip access
Follow Jeff Pao on Twitter at @jeffpao3