US chip curbs could accelerate China’s domestic chipmaking drive, analysts warn

Western concerns over China’s reported breakthrough in domestic chipmaking equipment may be premature, with analysts saying Dutch semiconductor equipment giant ASML still holds a significant technological lead. A state-backed company in Shanghai has begun manufacturing immersion deep ultraviolet (DUV) lithography machines, with about five systems expected this year and around 20 more in 2027. The first tools are reportedly set to be deployed at Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor and memory chipmaker ChangXin Memory Technologies (CXMT). The milestone marks a step forward for China’s semiconductor ambitions; industry observers say commercial success will depend on whether the machines can reliably support high-volume chip production over extended periods. Prototype versus production Media reports cited analysts cautioning that manufacturing a handful of immersion DUV lithography machines is very different from proving they can reliably operate inside semiconductor fabs around the clock. “Producing machines of the complexity of DUV immersion lithography that are commercially viable and running 24 hours, seven days a week, for an entire year is very difficult,” said Paul Triolo, partner and technology policy lead at DGA-Albright Stonebridge Group. Media reports also cited Jefferies analyst William Beavington as urging caution, noting that previous claims of Chinese progress in immersion DUV lithography had later proved inaccurate. He added that Chinese chipmakers are likely to continue buying ASML equipment wherever possible because of its proven performance and reliability. “China will no doubt continue to buy ASML machines as long as it can due to their significantly superior quality,” Beavington said. China also continues to rely heavily on imported semiconductor manufacturing equipment. According to Bank of America, semiconductor equipment imports into Anhui province, where CXMT is based, reached $226 million in March, more than double the monthly average in the second half of last year. Lithography systems accounted for 57 percent of those imports. Policy over technology As per the media reports, analysts believe the bigger long-term challenge for ASML may come from Washington rather than Beijing. The proposed Multilateral Alignment of Technology Controls on Hardware Act, or MATCH Act, would tighten restrictions on the sale and servicing of immersion DUV lithography systems in countries considered strategic rivals. Although the legislation has cleared the U.S. House Foreign Affairs Committee, it has not yet become law. “If the MATCH Act forced ASML to pull out its engineers, for example, Chinese immersion DUV efforts would be given a huge shot in the arm,” Triolo said. The analysts further argued that limiting Chinese chipmakers’ access to ASML engineers, spare parts and technical support could accelerate the adoption and improvement of domestic lithography equipment. Experts also believe that China’s efforts are unlikely to produce a single company comparable to ASML. Instead, the country’s lithography ecosystem is expected to involve multiple specialized companies contributing different technologies under a coordinated national effort. China remains unable to access the world’s most advanced extreme ultraviolet (EUV) lithography systems because of export controls, leaving immersion DUV as the most advanced lithography technology currently available to its chipmakers.Recommended ArticlesGet the latest in engineering, tech, space & science - delivered daily to your inbox.With over a decade-long career in journalism, Neetika Walter has worked with The Economic Times, ANI, and Hindustan Times, covering politics, business, technology, and the clean energy sector. Passionate about contemporary culture, books, poetry, and storytelling, she brings depth and insight to her writing. When she isn’t chasing stories, she’s likely lost in a book or enjoying the company of her dogs.