ASML CEO Christophe Fouquet

TMTPOST -- Although the progress that SMIC and Huawei have made in the semiconductor sector in recent years are pretty impressive, Chinese companies are 10 to 15 years behind industry giants like Intel, TSMC, and Samsung, said Christophe Fouquet, chief executive of toolmaker ASML.

It's well known that even with the best-in-class DUV tools, Chinese fab SMIC will be unable to match TSMC's process technologies cost-effectively. This is because Chinese companies cannot access leading-edge EUV lithography tools, he explained. 

"By banning the export of EUV, China will lag 10 to 15 years behind the West," said Christophe Fouquet in an interview with NRC. "That really has an effect."

ASML holds a critical position in the global chip supply chain, with nearly 90% of the world's chips produced using ASML's lithography systems.

In the semiconductor manufacturing industry, DUV (Deep Ultraviolet) lithography machines are used to produce chips with process nodes of 7nm and above, covering most digital chips and nearly all analog chips. 

As advanced processes evolve to 5nm and below, EUV (Extreme Ultraviolet) technology has become the core of future lithography and advanced manufacturing processes, primarily used for chips with process nodes of 7nm and below. Dutch company ASML is the sole supplier of EUV lithography machines. Since delivering its first stepper lithography machine in 1988, ASML has been deeply engaged in the Chinese market for 36 years. 

ASML has never delivered its EUV tools to China due to the Wassenaar Arrangement, despite reports of an order from SMIC for one EUV machine. While the specifics remain unclear, ASML refrained from shipping the tool to the Chinese foundry due to U.S. sanctions. However, ASML continued to supply advanced DUV lithography equipment, such as the Twinscan NXT:2000i, which is capable of producing chips using 5nm and 7nm-class process technologies. 

As a result, SMIC has been manufacturing chips for Huawei using its 1st and 2nd-generation 7nm-class process technologies for several years, helping the Chinese tech giants mitigate the impact of U.S. sanctions.

“We anticipate that the revocation of export licenses and the latest U.S. export control restrictions will not have a significant impact on our financial situation in 2023. During recent communications with ASML, the U.S. government further clarified the scope and implications of its export controls. On October 17, 2023, the U.S. released updated export control rules, restricting the shipment of certain mid-to-high-end DUV (deep ultraviolet) immersion lithography machines to specific advanced chip manufacturing fabs,” ASML said in its announcement. The company emphasized its continued commitment to complying with all applicable laws and regulations, including export control laws, in the countries and regions where it operates.   

“We are doing something important for the world, and we hold an incredible market position. We strive for this every day. But there is a cost: scrutiny and external pressure. This will persist, as China, the U.S., and every government view ASML as a crucial piece of the puzzle,” Fouquet noted.   

Fouquet also stressed, “If only a few large companies remain, it would be better for innovation. I have no doubt that Samsung will recover. Competitors also hope to see Intel perform well again. But if too many mistakes are made, it becomes difficult to reconnect the dots. Intel's recovery is of significant strategic importance to the U.S. It is their only path to continue manufacturing advanced chips independently.”