China's largest semiconductor manufacturer, SMIC, is reportedly testing the country's first domestically produced advanced chipmaking tools. This move aims to build a self-sufficient supply chain for producing artificial intelligence (AI) processors and challenge Western dominance in the sector.
The trials involve a deep-ultraviolet (DUV) lithography machine developed by Shanghai-based startup Yuliangsheng. A successful outcome would mark a significant step for China in its efforts to navigate U.S. export controls and reduce its dependence on foreign technology for its growing AI industry.
Key Takeaways
- Semiconductor Manufacturing International Corporation (SMIC) is testing a domestically produced DUV lithography machine from Yuliangsheng.
- The goal is to establish self-sufficiency in manufacturing advanced AI chips and overcome U.S. export restrictions.
- The current trials focus on 28nm DUV technology, which can be adapted to produce 7nm chips through multi-patterning.
- Significant challenges remain, including achieving mass production stability and developing more advanced EUV technology.
A Strategic Push for Semiconductor Independence
The new trials represent a focused effort by China to develop its own high-end semiconductor manufacturing capabilities. For years, Chinese chipmakers like SMIC have relied on equipment from foreign companies, particularly the Dutch firm ASML, which holds a near-monopoly on advanced lithography systems.
However, escalating export controls led by the United States have restricted China's access to new machines and maintenance services. This has created a critical bottleneck for the country's ambitions in AI and other advanced technologies. Developing a domestic alternative is seen as essential for long-term technological security.
The equipment under trial is a DUV lithography system, a foundational tool for patterning silicon wafers. According to two individuals familiar with the matter, the machine from Yuliangsheng is undergoing rigorous testing at SMIC's facilities.
"If successful, it would represent an important step for Chinese companies, which could build on this breakthrough for more advanced machinery."
- Lin Qingyuan, Semiconductor Analyst at Bernstein
This development follows previous, less advanced domestic efforts. Shanghai Micro Electronics Equipment, another Chinese company, produces DUV machines, but they are not considered as advanced as the systems required for cutting-edge processors.
The Technology Behind the Trials
The core of the current effort revolves around mastering DUV immersion lithography. This technique uses a layer of liquid between the lens and the silicon wafer to improve resolution, allowing for the creation of smaller and more complex chip features.
Understanding Lithography Technologies
Deep Ultraviolet (DUV) lithography has been the industry standard for decades, used to produce a wide range of chips. Extreme Ultraviolet (EUV) lithography is the next generation, using a much shorter wavelength of light to create the most advanced processors, such as those under 7nm. Access to EUV machines, made exclusively by ASML, is heavily restricted for China.
Sources indicate the Yuliangsheng machine being tested is a 28-nanometer (nm) system. While this may not seem cutting-edge, it is a crucial platform technology. Using a technique called multi-patterning, chipmakers can use 28nm DUV equipment to produce more advanced 7nm chips, like those found in Huawei's Ascend AI processors.
This method involves repeating the lithography process multiple times to create finer details on the chip. While effective, it is a more complex and costly process compared to using more advanced EUV machines.
With further refinement, these domestic DUV systems could potentially be pushed to produce 5nm processors, though likely with lower efficiency and yield rates. However, they cannot currently compete with the 2nm chips that companies like Taiwan Semiconductor Manufacturing Corporation (TSMC) plan to mass-produce using ASML's latest EUV equipment.
Hurdles on the Path to Mass Production
While the initial results from the SMIC trial are reportedly promising, the journey from a functional prototype to a reliable mass-production tool is long and challenging. One of the primary hurdles is achieving consistent performance and high yields.
The Challenge of Yield
In semiconductor manufacturing, 'yield' refers to the percentage of functional chips produced from each silicon wafer. New equipment often requires at least a year of fine-tuning and adjustments to reach the stability and high yields necessary for commercially viable mass production.
Another significant challenge is the supply chain for the machine itself. While the majority of components in Yuliangsheng's DUV system are sourced domestically, some critical parts still come from foreign suppliers. According to people familiar with the project, the company is actively working to replace these imported components to create a fully domestic machine.
The timeline for deployment remains uncertain. Even if the current trials are successful, it could take several more years before these domestic machines are ready for large-scale production lines. Bernstein analyst Lin Qingyuan noted the distinction between having a prototype and achieving competitive volume production.
"It is one thing to have a prototype of a lithography machine, it is another thing to put it into volume production and make it compete with ASML. This could take another few years."
- Lin Qingyuan, Semiconductor Analyst at Bernstein
China's Broader Semiconductor Ambitions
This DUV project is part of a much larger, state-backed initiative to build a comprehensive domestic chip industry. The ultimate goal is to reduce reliance on any single foreign country or company for critical technology.
Chinese chip manufacturers, led by SMIC, are aiming to triple their production capacity by 2026. Initially, this expansion will rely heavily on DUV machines from ASML that were purchased before export controls were fully implemented. The new domestic tools are being prepared to enter mass production as early as 2027 to support the next phase of growth.
The 'Mount Everest' Project: Pursuing EUV
While mastering DUV is the immediate focus, Chinese companies are also looking ahead to the next technological frontier: EUV lithography. Shenzhen-based SiCarrier, a shareholder in Yuliangsheng, is one of the companies dedicating significant resources to this challenge.
At the Shanghai Semicon Conference in March, SiCarrier showcased a range of advanced chip manufacturing equipment designed to compete with global leaders like Tokyo Electron and Applied Materials. The company's internal project to develop an EUV machine is reportedly codenamed "Mount Everest," reflecting the immense difficulty of the task.
These EUV efforts are still in their early stages. Overcoming the scientific and engineering obstacles to build a functional EUV system without foreign assistance is considered one of the greatest challenges in modern technology, making China's progress in the DUV space a critical stepping stone in its long-term strategy.
