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Tech war: Chinese media boast imminent chip-making tech breakthrough, as US threatens more equipment export restrictions

Chinese media have played up the possibility that the country could deliver its first home-grown 28-nanometre lithography machine by the end of this year, in what would be a major breakthrough in Beijing's drive towards technological self-sufficiency amid intensifying US-led chip equipment export restrictions.

Shanghai Micro Electronics Equipment (SMEE) is expected to deliver by year-end its proprietary SSA/800-10W, a 28-nm lithography machine, according to a report last week by Chinese newspaper Securities Daily.

The report was endorsed by state media, including Xinhua News Agency.

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Speculation had surfaced as early as 2020 that SMEE, a state-owned firm, was close to unveiling an immersion deep ultraviolet (DUV) lithography machine based on 28-nm technology by the end of that year.

SMEE, which was added to a trade blacklist by the US Commerce Department in December, did not respond to a request for comment on Wednesday.

Visitors walk past the Shanghai Micro Electronics Equipment booth during Semicon China, a semiconductor trade fair, in Shanghai in June. Photo: Reuters alt=Visitors walk past the Shanghai Micro Electronics Equipment booth during Semicon China, a semiconductor trade fair, in Shanghai in June. Photo: Reuters>

For now, China is relying partly on advanced DUVs made by Dutch semiconductor equipment maker ASML, which has already withheld from Chinese clients its extreme ultraviolet (EUV) lithography machines - used by industry giants like Taiwan Semiconductor Manufacturing Co, Samsung Electronics and Intel to make leading-edge chips for smartphones and artificial intelligence applications.

However, future shipments of ASML's DUVs have also become uncertain as the Netherlands is set to require the company to apply for a licence to sell to China its most sophisticated models, including the TWINSCAN NXT:2000i, from September 1.

Japan, home to chip tool makers Nikon and Tokyo Electron, began to restrict the export of 23 types of advanced chip-related equipment and materials in late July, including lithography systems.

These moves are widely interpreted as coordinated efforts with Washington, which imposed a sweeping round of export controls last October that curbed the sales of advanced semiconductor manufacturing equipment to China by American firms, like Lam Research and Applied Materials, on national security grounds.

The ASML headquarters and factory in Veldhoven, Netherlands. Photo: Bloomberg alt=The ASML headquarters and factory in Veldhoven, Netherlands. Photo: Bloomberg>

Meanwhile, China is also at risk of losing access to ASML's older DUV models.

The US government has been considering new rules that would allow it to restrict the shipments of foreign equipment with even a small number of US parts, such as ASML's TWINSCAN NXT:1980Di, to some Chinese facilities, according to a Reuters report in June, citing an anonymous source.

Such rules would "greatly affect" Chinese suppliers, as the country "only has a certain degree of self-sufficiency in mature process nodes", said Zhang Xiaorong, director at research institute Shendu Technology. An "over-10-year gap" exists between Chinese lithography machine projects and those of top overseas players, he added.

SMEE, seen by some as China's best hope to produce machines that can manufacture advanced chips, is so far capable of mass producing ArF lithography machines with a resolution of 90nm, which can be used to make lower-end chips, such as power management and radio frequency chips.

Still, that production process is highly reliant on foreign core materials, according to Zhang.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.