China has made major advances in self-sufficiency for AI chips, but lithography is still a concern

China has made significant strides towards self-sufficiency in AI chips amidst ongoing US export restrictions. These restrictions have accelerated efforts within the country to develop and use domestic chip-making tools. However, challenges remain, particularly in lithography, a critical technology for producing advanced chips.

Leading Chinese tool makers, such as Naura Technology and Advanced Micro-Fabrication Equipment (AMEC), are spearheading the move towards greater self-reliance in the semiconductor industry, as per a report by the South China Morning Post

Informal industries challenge US’ restrictions
There is an informal industry standard that mandates at least 70 per cent of production tools in Chinese semiconductor fabs be locally made. This push for local tools has been driven by Washington’s restrictions on advanced chip-making technologies, prompting Chinese chip makers to focus on increasing the production capacity of legacy chips used in cars and home appliances.

More from Tech

How ChatGPT is becoming everyone’s BFF and why that’s dangerous America ready for self-driving cars, but it has a legal problem

Paul Triolo, a senior vice-president at Albright Stonebridge Group, noted the significant progress in China’s semiconductor tool sector since the October 2022 US export control measures. This advancement is attributed to better vertical integration among tool makers and increased collaboration across the industry supply chain.

Gerald Yin Zhiyao, CEO of AMEC, has expressed optimism about China nearing a basic level of self-sufficiency in chip-making tools, a milestone that seemed distant just a few years ago.

The bottleneck - lithography a challenge
Despite these advances, lithography remains a critical bottleneck for China. Lithography systems are essential for printing intricate circuit patterns on semiconductor wafers, and the most advanced systems are subject to strict export controls.

Impact Shorts

More Shorts

America ready for self-driving cars, but it has a legal problem

Alibaba, Baidu begin using own AI chips as China shifts away from US tech amid Nvidia row

ASML, a Dutch company, is the only supplier of extreme ultraviolet (EUV) lithography systems required for cutting-edge chips. ASML also supplies deep ultraviolet (DUV) systems, which are less advanced but still crucial.

In 2023, only 1.2 per cent of the lithography systems used in Chinese foundries were domestically sourced.

This highlights China’s dependency on ASML, especially for DUV lithography gear, which is not covered by US sanctions. Chinese lithography leader SMEE is still lagging behind ASML in producing reliable lithography tools for 28-nanometer and below processes at scale.

Experts like Rene Raaijmakers, a Dutch technology writer, believe that China has the potential to develop many components for DUV and EUV systems, potentially at a faster pace than ASML due to the availability of advanced technology.

Other hurdles
Lithography is not the only area where China faces challenges. The local supply ratios for ion implantation and inspection and metrology systems are also low, at 1.4 per cent and 2.4 per cent, respectively.

In 2023, China’s imports of ion implantation systems increased by 20 per cent to $1.3 billion. The country’s semiconductor fabs heavily rely on foreign companies like KLA, Applied Materials, and Hitachi for metrology systems, with KLA holding around 50 per cent of the global market share in this sector.

Despite these challenges, China is determined to overcome these technological hurdles. The country’s efforts in advancing its semiconductor industry are seen as a response to the US export restrictions, driving innovation and collaboration within the domestic market.

The journey towards self-sufficiency in chip-making tools is ongoing, with significant progress made but crucial gaps yet to be filled.