Huawei is taking a central role in China’s development of its own lithography machines. The company is investing in suppliers and helping to introduce new equipment to chip manufacturers. However, for some crucial components, the Chinese industry remains dependent on foreign technology.
The Financial Times reports this based on interviews with industry insiders. Huawei is reportedly acting as the coordinator of efforts related to deep ultraviolet (DUV) lithography. In doing so, the company is bringing together component suppliers and Chinese chip manufacturers. SMIC, among others, is now testing equipment resulting from this collaboration.
China has been trying for years to build its own lithography equipment industry. While several specialized suppliers have emerged, according to Bernstein analyst Lin Qingyuan, there was no single entity capable of steering development across the entire supply chain, TNW reports.
Huawei now appears to be filling that role. The company is not only investing in component manufacturers but is also using its position to have new equipment actually tested by chip manufacturers. This is important because fabs take on risks when they incorporate unproven machines into their production processes.
A key player is Shanghai-based Yuliangsheng. The company collaborated on an advanced Chinese DUV machine currently being tested by SMIC and Huawei. According to the Financial Times, Yuliangsheng emerged from SiCarrier, a company that, according to earlier reports, has close technical and business ties with Huawei. Huawei denies that SiCarrier is affiliated with the group.
Yuliangsheng aims to produce twelve DUV machines by the end of this year. SMIC is reportedly testing a 28nm model and using multi-patterning to manufacture 7nm-level chips. This technique involves exposing a wafer multiple times to enable smaller structures.
German optics remain essential
It is precisely with the most complex components that the extent of the technological gap becomes apparent. According to sources cited by the Financial Times, Yuliangsheng’s machine uses projection lenses from the German company Zeiss. That company states that it supplies its lithographic optics exclusively to ASML. According to industry sources, such components may become available through the Chinese secondary market.
Huawei is therefore also investing in the development of Chinese alternatives. Its investment vehicle Habo and another Huawei-backed fund have invested in Fujian Zhiqi Photonics, a manufacturer of ultra-precise optics. The company was spun off from Castech in 2022; Castech has listed both ASML and Huawei as customers.
The light source also remains a bottleneck. This market is dominated by the Japanese company Gigaphoton and the American company Cymer, which is owned by ASML. Through Habo, Huawei has also invested in Beijing RSLaser Opto-Electronics, which develops Chinese light sources for lithography machines.
RSLaser previously supplied technology for older systems from Shanghai Micro Electronics Equipment (SMEE). According to Chinese media, the companies are now collaborating on a light source for a 28nm machine.
Significant gap with ASML remains
The fact that Chinese chip manufacturers are testing domestic DUV machines does not mean they can do without ASML in the short term. UBS estimates that, in the field of lithography, China has reached roughly the same technological level that ASML had around 2004. Chinese machines would also need several more years to approach the productivity of ASML systems.
For actual production, manufacturers such as SMIC will therefore continue to rely on Dutch equipment. Memory manufacturers CXMT and YMTC are also reported to have purchased enough ASML machines to continue their expansion in the coming years.
Meanwhile, ASML continues to develop its technology. Among other things, the company is working with TSMC on larger photomasks for High NA-EUV. This not only increases Chinese capacity but also shifts the technological frontier that Chinese suppliers are striving to reach.
U.S. export restrictions may have an unintended effect in this regard. Bernstein analyst Lin argues that the restrictions are forcing Chinese fabs to collaborate more closely with domestic suppliers. As a result, manufacturers of Chinese lithography equipment are gaining more opportunities to improve their machines through practical experience. The policy intended to limit China’s access to advanced chip technology may thus simultaneously accelerate the development of a domestic Chinese supply chain.