Recently, the Chinese government announced significant progress in the development of advanced chip manufacturing equipment by domestic companies in China, claiming that the resolution of the latest domestically produced lithography machine has reached 65 nanometers. Experts believe that compared to leading global companies like ASML from the Netherlands, Canon and Nikon from Japan, there is still a substantial gap in China’s EUV lithography machines. The long-term containment efforts by the United States and its allies are bound to weaken China’s military and technological expansion capabilities.
The Ministry of Industry and Information Technology of the Chinese Communist Party issued the first major technology equipment promotion and application guidance catalog on its official website on September 9, demanding local and central enterprises to strengthen coordination of national support policies in industries, finance, technology, and other sectors to promote innovation and application of major technological equipment.
Upon the news release, Chinese semiconductor company stocks surged significantly on September 11 on the Shanghai and Shenzhen stock exchanges, with some stocks even hitting the daily limit.
In response to the Chinese state media extensively reporting the major progress made in its domestically produced lithography machines, Liu Peizhen, Director of Industry and Economic Data at the Taiwan Institute of Economic Research, expressed in an interview with Epoch Times that the targets claimed by the Chinese Communist Party and the actual achievable yield still need further confirmation. She mentioned, “The difficulty threshold for lithography machines is already relatively high, and China may only have touched on certain thresholds and is eager to promote to prove its development opportunities in this area.”
Liu Peizhen stated that the actual effects and whether Chinese companies themselves can mass-produce these machines remain a cause for concern.
According to trade statistics from the Japanese Ministry of Finance, half of Japan’s exports of semiconductor manufacturing equipment and components, in addition to flat panel display manufacturing equipment, are sold to China. From January to March 2024, exports of related equipment to China increased by 82% year-on-year, reaching 521.2 billion yen (about 33.2 billion US dollars), setting a new record since 2007.
Liu Peizhen remarked that with the significant growth in China’s imports of semiconductor equipment from Japan this year, it proves that China still relies more on imported semiconductor equipment. China’s domestically produced lithography machines still lag behind those of the Netherlands and Japan, with a substantial gap in comparison to international standards.
Regarding the Chinese Communist Party’s claim of achieving a resolution of 65 nanometers with its domestically produced lithography machine, Chen Wenjia, Director of the National Research Center at Kainan University in Taiwan, told Epoch Times that despite China announcing certain technological breakthroughs, its achievements still need practical production and market validation.
Chen Wenjia indicated that Taiwan and South Korea have not completely overcome the bottleneck in lithography technology over the past 30 years, demonstrating the high complexity and difficulty of lithography machine technology. Moreover, the Chinese authorities have not disclosed any issues regarding yields, raising doubts about their actual competitiveness.
Former CEO of ASML in the Netherlands, Peter Wennink, once revealed that ASML is a system integrator that integrates technologies from hundreds of enterprises to create a lithography machine that cannot be replicated by others. For example, for a 5nm lithography machine, it requires tens of thousands of components, weighs 180 tons, and takes one year just to assemble.
Wennink said, “For example, the lenses come from Zeiss in Germany, electromechanical equipment from Sparton in the United States, excimer laser sources from Gigaphoton in Japan, and electron beam detection equipment from Hamamatsu in Taiwan.”
Regarding the Chinese Communist Party’s claim that they can mass-produce chips below 8 nanometers, Liu Peizhen believes that they may have a better chance with technologies above 28 nanometers. She mentioned that breaking through below 28 nanometers, even down to 10 or 8 nanometers, is extremely difficult.
After the United States placed Huawei and SMIC on their blacklist in 2019 and 2020, they have continued to increase control over Chinese companies while upgrading export control measures to China.
In 2022, the Biden administration expanded the control range to include the 14nm process and incorporated electronic design automation (EDA), AI artificial intelligence computing chips, manufacturing equipment, and personnel. To prevent international loopholes, the Biden administration has been striving to overcome opposition from allies and the tech industry to jointly adopt measures to restrict China’s access to cutting-edge chip manufacturing tools.
The US Treasury Department announced a new ban in June this year to limit American investment in AI and chip technology in China. The implementation details will be released soon, and currently, China is the only country explicitly included on the list of bans.
Regarding the United States’ years of joint containment efforts with allies against China’s semiconductor development, while China continues its research, there is skepticism about the effectiveness of these measures.
Since 2013, the Chinese government has considered semiconductors as a crucial innovation area, initiating the “Made in China 2025” plan in 2015 to reduce China’s chip imports from 85% to 30% by 2025, as reported by Taiwan’s “Tech Island.” However, according to IC Insights’ estimates, from 2015 to 2020, China’s usage of domestically produced chips increased from only 10% to approximately 16%, with many companies still facing financial difficulties.
Chen Wenjia stated that the US export controls on high-end chips to China have indeed limited the Chinese access to advanced equipment and technology, especially the control on exports of Dutch ASML lithography machines, directly weakening China’s ability to produce advanced process chips.
Regarding Huawei’s unexpected release of the Mate 60 Pro series with the self-developed Kirin 9000S processor in 2023, Liu Peizhen mentioned that Huawei utilized DUV multiple exposure equipment to develop it. Therefore, the US discovered that it is not sufficient to block EUV lithography machines alone.
She explained, “Therefore, this year, the United States, along with the Netherlands, and Japan, further lowered the control threshold, meaning that even the more medium to advanced DUV equipment must be further controlled. China will use these medium to advanced equipment in conjunction with multiple exposures techniques to achieve mass production of advanced process chips.”
Liu Peizhen highlighted that there have been differing opinions from the Netherlands and Japan regarding restrictions on the export of chip-related products and equipment to China, as it directly impacts their business interests. However, due to the crucial leverage of the “Foreign Direct Product Rule,” which the US holds, the Netherlands and Japan ultimately cooperate with the US to jointly contain China.
Under the “Foreign Direct Product Rule,” if a product is manufactured using US technology, the US government has the right to prevent its sale, even if the product is manufactured abroad.
“In general, I believe that the US containment measures have slowed down China’s semiconductor progress,” Liu Peizhen said.
Chen Wenjia emphasized that semiconductor technology is crucial for emerging technologies like artificial intelligence and quantum computing, which are key areas where China seeks to enhance its global influence. If China remains trapped in technical bottlenecks for an extended period, it will severely limit its military modernization and ultimately diminish its military and technological expansion capabilities.
Chen Wenjia stated that China has previously been accused of indirectly acquiring restricted advanced technology from other countries, shell companies, or under the guise of civilian purposes, especially in sensitive areas like military and semiconductors. As a result, the US and major technological countries continue to strengthen export controls and expand monitoring and sanctions on indirect technology transfers.
“However, obtaining technology does not equate to swiftly mastering application and mass production capabilities,” Chen Wenjia added.
Liu Peizhen pointed out that if China remains unable to acquire chip technology for a long time, they will certainly try to find loopholes through various means such as clever recruitment strategies. In other words, they will not give up on continuously developing this field independently, and their ambitions will continue to expand. “The future confrontation between the US and China is bound to be a long-term and normalized trend, this is inevitable.”