China's semiconductor industry, led by SMIC and Huawei, is making strides despite U.S. sanctions that restrict access to advanced Extreme Ultraviolet (EUV) lithography equipment from ASML. These restrictions have forced reliance on older Deep Ultraviolet (DUV) machinery and spurred efforts to develop domestic EUV technology.
SMIC has successfully developed a 5nm node using DUV lithography, but this process requires multiple patterning steps, leading to inflated costs and low yields. For instance, SMIC's 5nm chips are estimated to cost 50% more than those produced by TSMC using EUV technology.
Manufacturing yields for SMIC's 7nm and 5nm processes remain far below industry standards, with estimates of less than 50% and 30-40%, respectively. This limits the commercial viability of these chips.
Huawei is constrained to producing chips like the Kirin series on the 7nm process, with limited capacity to innovate due to technological bottlenecks.
To overcome these challenges, China is focusing on developing home-grown EUV lithography systems:
Unlike ASML's Laser-Produced Plasma (LPP) method, China's prototype uses LDP technology. This approach simplifies design, reduces power consumption, and lowers manufacturing costs.
Trial production of these domestic EUV machines is expected in Q3 2025, with mass production potentially starting in 2026.
The LDP-based system can generate EUV light at a wavelength of 13.5nm, meeting advanced photolithography requirements. This could significantly reduce dependency on foreign technology while enhancing competitiveness.
While domestic EUV systems promise cost efficiency, their actual performance and scalability remain uncertain.
Success in developing indigenous EUV technology would mark a major milestone for China’s semiconductor independence and could challenge U.S.-led export controls.
If Huawei and SMIC overcome current hurdles, they could close the technological gap with global leaders like TSMC and Samsung, potentially reshaping the semiconductor industry.
U.S. sanctions have created significant obstacles for China’s semiconductor ambitions, domestic innovation in EUV technology represents a critical path forward. However, the road to commercial viability remains fraught with technical and economic challenges.
Agencies