Chinese Semiconductor Companies Expanding Acquisition of DUV Equipment

Chinese semiconductor companies are focusing on a deep ultraviolet (DUV) lithography process as they cannot purchase equipment for a more sophisticated extreme ultraviolet (EUV) process, which is used to produce more advanced semiconductors.

EUV lithography uses an EUV light of the extremely short wavelength of 13.5 nanometers in defining a pattern in photoresist, while DUV lithography uses 254–193-nm light.

SMIC, China’s No. 1 foundry company, has recently decided to extend its contract with Dutch semiconductor equipment company ASML to 2022 and increase imports of DUV equipment. A Chinese economic daily reported that China’s largest foundry company SMIC is increasing purchases of ASML’s DUV equipment to increase its competitiveness in DUV process.

SMIC has been negotiating with ASML since early 2021 to expand the size of DUV equipment purchases. However, the U.S. government’s tightening of regulations on semiconductor equipment has disrupted SMIC’s DUV purchases. However, as it was belatedly confirmed that DUV equipment was excluded from the U.S. sanctions, SMIC decided to increase imports of DUV equipment from ASML. Currently, 30 percent of ASML’s sales come from China and most of them are sales of DUV equipment to SMIC.

Unlike EUV equipment used for sub-10 nm processes, the resolution of DUV equipment is more than 30 nm. Accordingly, it has been mainly used for production of power management ICs (PMICs) and microcontroller units (MCUs) for automobiles. However, semiconductor manufacturers have developed double patterning and quadruple patterning technique, which allows them to produce  products in the 10-nm range with DUV equipment. Currently, TSMC and Samsung Electronics are also making products in the 10-nm range using DUV equipment.

Chinese companies turned their eyes to the DUV process from the more advanced EUV process as imports of EUV equipment has become impossible. As they cannot make more lucrative products under 10 nm, they aim to increase their competitiveness in 14-nm or larger products, which accounted for 73 percent of the total system semiconductor market as of the end of 2020.

SMIC has decided to spend US$11 billion by 2023 to expand its DUV lines in Shenzhen and Shanghai. “Chinese companies currently use about 1,000 pieces of ASML’s DUV-related equipment,” the economic daily said. “Competition is expected to heat up between Chinese companies represented by SMIC and Taiwan’s MediaTek, Vanguard International Semiconductor (VIS), and Power Chip.”

Chinese companies are also known to be acquiring used equipment from Japanese semiconductor companies. Japan’s Nihon Keizai Shimbun (Nikkei) recently repoted that Chinese semiconductor companies such as SMIC are aggressively buying used semiconductor equipment from Japanese chipmakers.