Ever since the United States added Huawei to its Entity List in 2019, its chip designing subsidiary HiSilicon became Huawei’s main source of chips. Back then, HiSilicon was the second largest customer of TSMC.
When more sanctions followed, not only was HiSilicone deprived of TSMC’s advanced manufacturing processes, its alternative supplier, Semiconductor Manufacturing International Corporation (SMIC), was also barred from obtaining ASML’s EUV (Extreme ultraviolet) lithography equipment. SMIC is China’s homegrown champion to rival TSMC, but has been facing difficulties with progressing to 7nm and beyond without the EUV machines. According to SMIC, it can only manufacture at 40nm node without US suppliers.
Ever since, Huawei and the Chinese semiconductor industry have been striving to expand upstream, realizing that the IC manufacturing equipment are the chokepoint of the industry. Recently, industry watchers believe that Huawei has taken the first move to develop its own photolithography equipment. .
China’s first domestic DUV lithography machine?
Hubble Technology Investment, Huawei’s investment vehicle founded in 2019, has lately taken a 4.76% share in Beijing RSLaser Opto-Electronics Technology, becoming its 7th largest shareholder. On the first look, it appears to be an ordinary laser technology company. However, it could fill a gap essential to China’s development of its own lithography equipment.
RSLaser has developed China’s first high-energy excimer laser technology, and has also claimed to be the third company to have done so in the world. The company was jointly founded in 2016 by the Institute of Microelectronics under Chinese Academy of Sciences and Beijing E-Town Capital, a state investment vehicle that often cooperates with China’s IC policy fund.
RSLaser was founded to commercialize the result of China’s national research program in argon fluoride (ArF) laser, which operates in the deep ultraviolet (DUV) at a 193-nanometer wavelength, and has been widely used in immersion photolithography machines. The breakthrough in ArF laser has been lauded by China as a watershed moment, enabling its chip industry to move below the 28nm manufacturing node.
In 2018, RSLaser shipped its products for the first time. It has also become a supplier of Shanghai Microelectronics Equipment Co. (SMEE). SMEE is China’s most prominent photolithography equipment manufacturer, but it only produces 90nm lithography machines. However, SMEE has announced that it will deliver China’s first 28nm lithography machines between 2021 and 2022.
Technically, DUV machines can enable 7nm process node, as TSMC achieved via multiple-patterning.
A long road to catch up with ASML
It remains to be seen what role Huawei will play in the development of China’s first homegrown DUV machines. Ren Zhengfei, Huawei’s founder and CEO, believes that China’s semiconductor industry is mainly constrained by manufacturing equipment rather than chip design capabilities, but at the same time Ren recognizes the high entry level to develop domestic chip manufacturing equipment, given its complexity.
According to SMEE, for example, despite its 20 years of lithography machine development, its current 90nm equipment is still ten years behind ASML’s products.
Ren Zhengfei also cites market demand as another potential impediment: even if one successfully manufactures its own chip equipment, the limited market demand might not match the tremendous investment poured into the R&D. For example, ASML only shipped 31 EUV machines last year, five more compared to its shipment volume in 2019. “Ultimately, it is a matter of policy”, Ren said.
ASML reportedly worried?
Despite the technology gap, ASML is said to be worried about China’s catching up process.
Justin Yi Fu Lin, a renowned Chinese economist and former Vice President of the World Bank, has claimed that ASML CEO, Peter Wennink, is concerned about the US ban on the EUV equipment sales to China. The CEO reportedly believes that it will take only three years for China to master advanced lithography machines, and by then it can produce them at lower, more competitive prices, ousting ASML from the global market in the process.
Wennink has indeed been critical of the current US sanctions on China, thinking that it will only hasten the country’s technology autonomy and eventually damage European industry in return.
“If you want to stay ahead of China, you have to lead in innovations”, he said.