China’s semiconductor industry has witnessed a staggering 1,050% increase in the value of chip-making lithography systems imported from the Netherlands in November, compared to last year. The total value of these imports reached an impressive US$762.7 million, marking a tenfold year-on-year surge. This surge is particularly noteworthy as it comes amidst tightened export rules imposed by the United States.
Of the 42 lithography systems imported by China in November, the Netherlands played a pivotal role, contributing 16 systems. ASML, the Netherlands-based company and the world’s leading exporter of lithography machines has significantly influenced China’s chip-making landscape. These advanced machines are crucial for producing integrated circuits, a technology area where China has faced challenges despite substantial government investment.
Notably, the surge in imports is a response to the United States’ expanded export control rules in October, specifically targeting the area of lithography systems. The removal of the “de minimis” rule impacted certain deep-ultraviolet tools, prompting a rush of shipments before the new restrictions took effect. ASML’s CEO, Peter Wennink, clarified that the latest restrictions primarily exclude the majority of its Chinese customers engaged in mature or legacy semiconductor manufacturing.
Chinese imports also surged from Japan, another key player in the semiconductor industry. Fifteen lithography systems, valued at US$816.8 million, were imported in November, with Canon and Nikon being notable contributors. However, Japan, like the Netherlands, had imposed export controls on chip-making equipment in response to a U.S. request in January.
Despite the challenges posed by these export controls, Semiconductor Manufacturing International Corp (SMIC) has exhibited resilience. In the face of a 15% drop in revenue in the September quarter, SMIC increased its 2023 budget to a substantial US$7.5 billion, demonstrating a continued commitment to semiconductor manufacturing. SMIC, a major industry player, can still procure DUV systems from ASML, except its Shanghai fabs.
Chinese imports of semiconductor manufacturing equipment, as a whole, rose by over 90% year-on-year in the last quarter, amounting to 63.4 billion yuan ($8.7 billion), according to Chinese customs data. The concerns linger that the imported equipment, particularly advanced lithography tools, could potentially be utilized to manufacture high-end semiconductors, enhancing China’s manufacturing capabilities and closing the technological gap.
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