SMIC & ASML – Clarification
As we noted previously, Chinese semiconductor supplier SMIC (688981.CH), a member of the infamous US ‘entities’ list, noted that some of its suppliers had been granted a license by the US Commerce Department, allowing them to sell components or tools that were made using US technology. Among the most important was ASML (ASML), one of two global suppliers of lithography equipment necessary for production of all semiconductor products. SMIC, the largest semiconductor producer in China, has been tasked with the goal of reducing or eliminating China’s dependence on US semiconductor process equipment and product, and to that end it has both capacity expansion plans and node size reductions as part of its timeline.
When the exemptions were given out, some made the assumption that SMIC would then be allowed to purchase any equipment made by ASML, including EUV tools that would allow SMIC to move to the 7nm and 5nm nodes to compete with Samsung and Taiwan Semi (TSM)., and the extension of SMIC’s contract with ASML through the end of this year, furthered that speculation. That said, ASML has released clarification as to the extent of the license that enabled the SMIC contract extension, which indicated that the contract extension under the license, was for DUV lithography tools only. By making that statement, it indicates that ASML and SMIC do not have an agreement on the more sophisticated EUV equipment needed for the 7nm/5nm nodes, with most now making the assumption that the US license specifically indicated the limitation on EUV tools.
SMIC has been moving its advanced production from 14nm to what it calls the N+1 7nm node, which it says is comparable to TSM’s 7nm node and does not require EUV, but the technology is still being developed and no word on whether it can be transferred to the 5nm has been revealed. SMIC has little choice at this point, at least at the 7nm node and will likely continue to push its hone-grown (non-EUV) technology for as long as possible, while ASML is happy to supply DUV equipment to Chinese fabs, with 7nm production expected about 30 months out. Until then SMIC stays at 14nm, which keeps them far from being competitive with Samsung and TSM, who are working toward less than 5nm nodes in roughly the same timeframe.
When the exemptions were given out, some made the assumption that SMIC would then be allowed to purchase any equipment made by ASML, including EUV tools that would allow SMIC to move to the 7nm and 5nm nodes to compete with Samsung and Taiwan Semi (TSM)., and the extension of SMIC’s contract with ASML through the end of this year, furthered that speculation. That said, ASML has released clarification as to the extent of the license that enabled the SMIC contract extension, which indicated that the contract extension under the license, was for DUV lithography tools only. By making that statement, it indicates that ASML and SMIC do not have an agreement on the more sophisticated EUV equipment needed for the 7nm/5nm nodes, with most now making the assumption that the US license specifically indicated the limitation on EUV tools.
SMIC has been moving its advanced production from 14nm to what it calls the N+1 7nm node, which it says is comparable to TSM’s 7nm node and does not require EUV, but the technology is still being developed and no word on whether it can be transferred to the 5nm has been revealed. SMIC has little choice at this point, at least at the 7nm node and will likely continue to push its hone-grown (non-EUV) technology for as long as possible, while ASML is happy to supply DUV equipment to Chinese fabs, with 7nm production expected about 30 months out. Until then SMIC stays at 14nm, which keeps them far from being competitive with Samsung and TSM, who are working toward less than 5nm nodes in roughly the same timeframe.
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