US and Dutch export controls prevent ASML from supplying its most advanced DUV machines to China, leaving many Chinese fabs to rely on older equipment \u2014 notably the Twinscan NXT:1980i system \u2014 to manufacture the seven-nanometre chips needed to develop AI<\/a> systems. <\/p>\n In industry parlance, \u201cnanometres\u201d denotes successive generations of chip, rather than physical dimensions.<\/p>\n According to those familiar with the techniques, Chinese fabs have obtained components on the secondary market. This includes an upgraded \u201cstage\u201d, a mechanical platform for the silicon wafer, as well as lenses and sensors that help ensure that chip layers are aligned with greater precision. <\/p>\n These improvements to ASML\u2019s DUVs have enabled Chinese fabs to bolster their AI chip production.<\/p>\n China\u2019s chipmakers Semiconductor Manufacturing International Corporation (SMIC) and Huawei are among those known to be using older ASML machines to build seven-nanometre production lines \u2014 although it is unclear if they have secured further component upgrades.<\/p>\n The moves underscore how Chinese chipmakers are finding methods to overcome global export controls meant to stall the country\u2019s technological rise.<\/p>\n The US has sought to apply curbs to stop China accessing cutting-edge chips, while pressuring governments in the Netherlands, South Korea and Japan to also tighten their sales controls. The American-led effort is designed to push companies across the global semiconductor<\/a> supply chain to curtail business with Chinese customers. <\/p>\n Under this regulatory regime, ASML is allowed to provide engineering support for Chinese customers to service their existing equipment. <\/p>\n But the Dutch company is restricted from servicing upgrades to the \u201coverlay\u201d, or positioning accuracy of the DUV machines, or from making changes that improve the \u201cthroughput\u201d \u2014 or speed \u2014 of the machines beyond 1 per cent. <\/p>\n Multiple people familiar with the arrangements said local fabs sourced components overseas and ship them to China. They said that third-party companies provided on-site engineering to upgrade existing DUV machines.<\/p>\n ASML said it \u201cfully complies with all applicable laws and regulations\u2009.\u2009.\u2009.\u2009The company operates strictly within these legal frameworks and does not support system upgrades that allow customers to improve performance levels beyond what is permitted by law.\u201d<\/p>\n Export controls also prevent ASML from supplying China with even more advanced extreme ultraviolet (EUV) machines.<\/p>\n That has led Chinese fabs to use techniques such as multiple DUV exposures \u2014 a process known as \u201cmulti-patterning\u201d \u2014 to produce advanced chips. But the method demands longer machine run-times, increasing production costs and reducing \u201cyield\u201d \u2014 the percentage of functional chips.<\/p>\n Component upgrades had enabled the fabs to mitigate some of these constraints and raise output of AI and advanced smartphone chips, said those familiar with the matter.<\/p>\n Analyst group TechInsights said this month that SMIC continued to push the boundaries of this multi-patterning technique beyond the seven-nanometre process. It added that Huawei\u2019s latest Kirin 9030 processor revealed China\u2019s most advanced chip manufacturing<\/a> process to date. <\/p>\n \u201cChinese fabs have been able to achieve impressive feats without full access to the best equipment available to others like TSMC and Samsung,\u201d said TechInsights chief strategy officer Dan Kim. <\/p>\n The US Bureau of Industry and Security had been probing what support ASML has been providing to Chinese customers and had been preparing to make the rules stricter to stop it providing some servicing support permitted under the current rules, said two people familiar with the agency\u2019s thinking. <\/p>\n It is unclear if BIS will push ahead with rule changes after the Trump administration signalled a truce in its trade war with Beijing.<\/p>\n ASML has lobbied against export controls on China, an important market and the world\u2019s largest purchaser of wafer fabrication equipment in 2024.<\/p>\n Former chief executive Peter Wennink argued such curbs provided no additional security benefit for the west, since China already had the equipment it needed to make chips for military purposes. <\/p>\n Recommended<\/p>\n
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