Despite rigorous US sanctions designed to stifle China's progress in semiconductor technology, China is rapidly advancing. The forthcoming 28nm lithography equipment is not cutting-edge by global standards but marks a noteworthy milestone in China's technological journey.
The United States has implemented a series of restrictions and trade barriers aimed at curbing China's chipmaking progress. Companies like ASML, the Dutch firm holding a monopoly on advanced deep ultraviolet (DUV) and extreme ultraviolet (EUV) lithography machines, have been barred from selling their most sophisticated tools to Chinese companies. Starting January 2024, ASML will stop delivering even mid-tier DUV lithography machines to China. These measures are part of a broader effort to prevent China from achieving self-sufficiency in producing advanced chips, especially those critical for AI, 5G, and other high-tech fields.
In response to these challenges, Beijing has significantly increased its investment in semiconductor technologies. In 2014 and 2019, China invested $19 billion and $27.5 billion, respectively, to boost domestic chip production. The year 2023 saw a major leap, with the Chinese government announcing a $41 billion fund to accelerate progress in integrated circuits and lithography equipment.
This aggressive funding strategy has begun to bear fruit. China's largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC), recently produced a 7nm chip for Huawei's Mate 60 Pro smartphone using less advanced lithography equipment, showcasing China's capability to innovate despite technological constraints.
The most significant development comes from Shanghai Micro Electronics Equipment Group (SMEE), a state-backed company specializing in lithography tools. Currently, SMEE's most advanced machines produce 90nm chips, far behind the global leaders like TSMC, Samsung, and Intel, who are manufacturing at 3nm and beyond. However, SMEE has announced that by the end of 2024, it will deliver its first 28nm lithography machine, the SSA/800-10W. Although not on par with ASML's DUV and EUV technologies, this represents a considerable leap for China's semiconductor industry.
While 28nm technology may seem outdated compared to the advanced nodes produced by global giants, it remains commercially viable for many applications, such as automotive systems, home appliances, and industrial equipment. By developing 28nm lithography capabilities, China aims to reduce its reliance on foreign suppliers, strengthening its domestic supply chain.
This progress sets the stage for future advancements. SMEE's success with 28nm equipment positions it to gradually tackle more complex technologies, potentially narrowing the gap with global leaders over time.
Despite these achievements, China’s semiconductor ambitions still face significant hurdles. The technology for EUV lithography, essential for chips at 5nm and below, is highly complex and monopolised by ASML. Experts predict that it could take China until the end of the decade to develop comparable EUV capabilities, even with substantial funding and government support.
