ASML (Advanced Semiconductor Materials Lithography) is a Dutch corporation that designs and manufactures lithography machines for the semiconductor industry. The lithography machines are one of the most important equipment in chip building.

Access to ASML’s cutting-edge lithography technology is one of the reasons behind TSMC‘s massive success as a contract chip manufacturer that works with most of the big giants in the industry such as NVIDIA and Qualcomm.

The high-NA lithography technology is expected to reduce the transistor size by 66%

Now the latest news is that ASML is going to ship its most advanced lithography machine worth US$ 380 million (~2.753 billion yuan) to TSMC this year. ASML Chief Financial Officer Roger Dassen revealed in a recent conference call that the company’s two largest customers, TSMC and Intel, will obtain its high numerical aperture (high-NA) extreme ultraviolet (EUV) lithography technology within 2024.

Reportedly, ASML has already delivered the world’s first commercial high-NA EUV lithography machine to Intel, starting with the first unit delivered to a factory in Oregon in late December. The exact time when TSMC will get the latest and most advanced tool from ASML is unclear at this point.

The high-NA lithography technology is expected to reduce the transistor size by 66%. So, it could enable chip manufacturers to fit more of them in a same-sized piece of silicon. Obviously, there is much more than just the transistor count (such as power efficiency) when it comes to sustained performance. But the power efficiency also improves with the reduction of the size.

Reportedly, the high-NA EUV system achieves a numerical aperture of 0.55. Compared with the previous EUV systems equipped with a 0.33 numerical aperture lens, the accuracy will be improved and will enable more sophisticated patterning on the silicon.

The machine is also 30% larger than the predecessors which are already so large that they require three Boeing 747s to carry them.

Speaking of TSMC, the development of the 2nm nodes is reportedly progressing smoothly. The company has plans to start the development of N3X and N2 process in Q2 2025. Mass production of N2P and A16 will begin in Q2 2026. Its 2nm process will use Gate-all-around FETs (GAAFET).

TSMC expects its 2nm process could bring 10% to 15% performance improvement along with 25% to 30% lower power consumption.

(Source)

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ASML Holding NV, the world’s leading provider of lithography systems crucial for chip manufacturing, has reported robust financial performance in the fourth quarter of 2023, despite facing challenges from export restrictions impacting its sales to China.

In the financial arena, ASML announced a 9% increase in net profit, totaling €2.0 billion ($2.2 billion), with sales surpassing analyst expectations at €7.2 billion. The company received record orders exceeding €9 billion, demonstrating a significant uptick from the previous quarter. Notably, orders for the cutting-edge “extreme ultraviolet” (EUV) machines amounted to €5.6 billion, reflecting the strong demand for advanced lithography systems.

Looking ahead to 2024, ASML maintains a cautious outlook despite the impressive quarterly performance, anticipating flat sales growth. CEO Peter Wennink highlighted uncertainties in the semiconductor market recovery but pointed out positive signs, such as improving chip demand and higher factory utilization rates.

ASML’s dominance in the global market for lithography systems, essential in chip manufacturing, is evident, with positive remarks dispelling bearish arguments regarding the technology progression outlook. Analysts anticipate a potential outlook revision later in the year as end markets continue to recover.

However, the impact of export restrictions on sales to China in 2024 is a notable concern. New U.S. and Dutch export restrictions, implemented in 2023, are expected to affect up to 15% of ASML’s sales to China, impacting its status as the third-largest market. China’s demand for lithography machines decreased from 46% in the previous quarter to 39% in Q4 2023, emphasizing the impact of these restrictions.

Despite challenges, ASML’s unique position as the sole producer of equipment required for manufacturing the most advanced semiconductors positions the company as a bellwether for the overall health of the semiconductor industry. The recent surge in ASML shares to their highest level since November 2021, up 6.7% to €754.30, reflects the market’s positive response to the company’s performance.

ASML’s Q4 2023 results showcase resilience in the face of export restrictions, with analysts closely monitoring the potential for an outlook revision later in the year as industry recovery continues.

Related:

• Samsung and ASML forge $760 Million partnership for Semiconductor advancements
• China’s SMIC utilizes ASML technology: Defying Export Restrictions for Self-Made Chip
• Lawmakers in Netherlands criticize US Export restrictions on ASML Chip Machines

(via)

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In a startling revelation, sources have disclosed that China’s Semiconductor Manufacturing International Corp (SMIC) employed equipment from ASML Holding, including their immersion deep ultraviolet (DUV) machines, to manufacture an advanced processor for Huawei Technologies’ latest 5G smartphones. 

The use of ASML’s technology, despite broad export restrictions imposed by the US, raises concerns about China’s rapid progress in chip manufacturing. Huawei’s Mate 60 Pro series, powered by a 7-nanometer chip, showcased the nation’s technological prowess, leaving experts questioning the effectiveness of international controls.

ASML, a key player in the global chip supply chain, saw its shares dip in response to the news. While the company has a monopoly on advanced extreme ultraviolet lithography systems (EUVs), it also supplies less-advanced DUV machines for producing mature semiconductors. Although ASML has been unable to sell its EUV machines to China due to strict export regulations, the DUV models were utilized by SMIC in combination with tools from other firms to create the groundbreaking chip for Huawei’s 5G smartphones.

This development hints that export restrictions on ASML’s advanced technology might have been implemented too late to curb China’s technological advancements, raising concerns about potential military implications. Despite these restrictions, Huawei managed to introduce a cutting-edge processor, prompting further questions about how SMIC accomplished this feat and the effectiveness of international efforts to halt China’s progress in the semiconductor industry.

Huawei’s Comeback with self- made Chip:

Amidst the controversy surrounding Huawei’s latest Mate 60 Pro, the spotlight falls on the company’s resilience and innovative spirit. In the face of challenges stemming from US sanctions, Huawei was compelled to reassess its strategies after losing access to Google’s apps and its silicon due to pressure on chip-making giant TSMC. 

Huawei’s response was a strategic pivot, leading to the development of the Kirin 9000 chip, marking a significant comeback for the Chinese tech giant. This move not only signifies Huawei’s determination to overcome obstacles but also highlights its ability to produce cutting-edge smartphones with in-house technology, recapturing the attention of the tech world and potentially paving the way for the company’s resurgence in the smartphone market.

The situation underscores the challenges faced by regulators, as even limited access to less-advanced equipment enabled China to achieve remarkable results, showcasing its ability to adapt and innovate within existing constraints. The incident has sparked a debate on the adequacy of existing controls and the need for more stringent measures to safeguard advanced semiconductor technology.

Related:

• Lawmakers in Netherlands criticize US Export restrictions on ASML Chip Machines
• Former ASML Employee Joins Huawei: What This Means for Global Chip Technology
• The New King of Smartphones: Huawei Mate 60 Pro Outsells iPhone 15 Pro Max in China

(via)

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The unilateral imposition of new export regulations by the United States on Dutch tech giant ASML Holding’s chipmaking machines has sparked a heated debate among Dutch lawmakers. Trade Minister Liesje Schreinemacher faced challenging questions in the parliamentary session, where concerns were raised regarding the US’s approach to regulating the export of ASML’s Twinscan NXT1930Di and Twinscan NXT1980Di machines to China.

During the debate, Minister Schreinemacher expressed the Dutch Cabinet’s willingness to comply with the new US regulations but emphasized the need for a more cohesive European strategy to address the issue. The recent US rules grant Washington the authority to restrict the export of ASML’s advanced lithography machines containing any US components, a move widely seen as part of the US strategy to curb China’s technological and military advancements.

In response to the US government’s recent announcement on advanced computing and semiconductor manufacturing equipment export controls, ASML, headquartered in Veldhoven, Netherlands, expressed a commitment to careful assessment. They acknowledged the forthcoming regulations, expecting their application to be limited to select semiconductor facilities in China. CEO Peter Wennink noted that the Twinscan NXT1980Di tool, capable of producing both advanced and older computer chips, could fall under the US export control restrictions.

ASML assured stakeholders that these measures are not anticipated to significantly impact their financial forecasts for 2023, 2025, and 2030, as outlined during their Investor Day in November 2022. While acknowledging potential regional effects on sales, the company stressed compliance with all relevant laws, including export control legislation, and indicated plans to seek further clarification from US authorities on the regulations’ scope. 

China, accounting for a significant portion of ASML’s sales, remains a crucial market for the company. Wennink expressed confidence in the resilience of demand from Chinese chipmakers despite the growing challenges posed by export restrictions imposed by both the US and Dutch governments. The Netherlands, acknowledging US security concerns, has supported the need for export restrictions while emphasizing the sovereign right of every nation to make decisions concerning exports.

ASML’s compliance with the US rules comes after continuous pressure from the United States on the Dutch government since 2019, urging restrictions on the export of advanced chipmaking machines to China. In response, the Dutch government introduced its licensing requirements earlier this year, targeting slightly less advanced machines. However, the newly announced US regulations have raised questions about the extent of cooperation and consent between the US and Dutch governments in imposing these restrictions.

As the situation continues to unfold, Dutch lawmakers remain engaged in discussions, exploring options for a unified European response to navigate the challenges posed by the evolving landscape of international trade and technology transfer.

Related:

• Former ASML Employee Joins Huawei: What This Means for Global Chip Technology
• Chinese Investors are Shifting from TSMC to ASML Amid Geopolitical Tensions
• TSMC faces Profit Decline amid Chip industry downturn

(via)

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A former ASML employee accused of stealing trade secrets has surfaced at Huawei Technologies, sparking concerns over how deeply Chinese firms may be trying to infiltrate the closely guarded world of semiconductor technology.

Huawei recently released a 5G smartphone with 7nm architecture as well

In February 2022, ASML, a leading name in semiconductor manufacturing technology, revealed that one of its China-based employees had taken proprietary data without permission. While the company downplayed the impact, referring to it as “one piece of a puzzle you don’t have the box for,” recent reports indicate that the same individual now works for Huawei. This could spell trouble given Huawei’s placement on the U.S. Entity List since 2019, restricting its access to advanced chip tech.

What’s unsettling is that ASML holds a near-monopoly in extreme ultraviolet (EUV) lithography machines, critical for making cutting-edge chips. Their main customer? Taiwan Semiconductor Manufacturing Co (TSMC), which used to be a big supplier to Huawei until the U.S. sanctions.

While Huawei released a 5G smartphone featuring a 7-nanometer processor in August, this chip likely didn’t benefit from ASML‘s most advanced tech, suggesting the company might be exploring alternative paths to keep its edge in chip manufacturing. This move can also be read as China’s attempt to show resilience amid U.S. sanctions.

Importantly, ASML has not been the only company to sound the alarm on Chinese firms’ ambitious activities. IP theft and talent poaching have been on the rise, with Beijing notably aiming to snag Taiwan’s tech talent, and a flurry of U.S. investigations into other Chinese companies like Innoscience. With ASML set to comply with new Dutch regulations that further limit its exports to China, Huawei’s new employment choice paints a darker picture of the complex web that’s global tech trade.

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The United States and the Netherlands are intensifying efforts to restrict China’s access to crucial equipment required for semiconductor manufacturing. This move follows recent reports of potential sanctions on American companies supplying AI chips to Chinese clients. These measures aim to further limit business dealings between vendors like ASML and Nvidia and Beijing, as new export controls take effect.

The Dutch government is set to unveil fresh regulations, introducing a licensing requirement for ASML’s second-best product line. The government announced that new controls on ASML, the world’s sole provider of advanced lithography equipment for cutting-edge chips, will take effect on September 1. ASML is already prohibited from selling its most advanced technology, EUV lithography machines, to Chinese clients. The forthcoming controls will extend the restrictions to ASML’s second most powerful line, DUV machines, requiring a special license for sales in China. By imposing stricter controls, the Netherlands aims to curtail certain equipment exports to China.

The US is poised to adopt a comprehensive approach, imposing licensing requirements for the export of equipment to around six Chinese facilities, including a fab operated by SMIC, a prominent semiconductor manufacturer in China. This move, part of the ongoing US-China tech war, aims to restrict specific equipment not only from ASML and other Dutch companies but also to exert control over additional Dutch equipment destined for targeted Chinese wafer fabs.

The US government is set to release a list of the six semiconductor factories, which includes China’s largest chipmaker SMIC, where ASML will be required to obtain licenses for deploying DUV (Deep Ultraviolet) equipment. However, according to Reuters, it is expected that requests for equipment licensing to these facilities will likely be denied on security grounds.

These measures reflect an escalating effort by the US and the Netherlands to curb China’s technological advancements in the semiconductor industry. By tightening export controls, the two countries aim to safeguard their strategic interests and protect sensitive technologies from reaching Chinese companies operating in the semiconductor sector.

A brief overview of the US-China Tech War:

The US-China tech war intensifies as trade restrictions on semiconductors tighten. Former President Donald Trump’s administration initiated the conflict by cutting off Fujian Jinhua Integrated Circuit in October 2018, accusing the Chinese firm of stealing trade secrets. Subsequent actions included blocking the sale of Dutch chip manufacturing technology to China and banning semiconductor shipments to Huawei Technologies in May 2020. The US added China’s top chipmaker SMIC and other firms to a trade blacklist in December 2020, limiting their access to advanced semiconductor production technology. These measures reflect the growing competition and security concerns in the semiconductor industry.

In September 2022, US chip designers Nvidia and Advanced Micron Devices were instructed to halt certain exports to China, affecting computing chips for AI work. The Biden administration further escalated the conflict in October 2022 by introducing comprehensive export controls, including limitations on certain semiconductor chips made using US equipment.

Meanwhile, the Netherlands plans to curb sales of ASML equipment to Chinese chipmakers, as reported on June 29, 2023. Additionally, the US is expected to go even further by withholding more Dutch equipment from specific Chinese fabrication plants. US officials are considering tighter export control rules on AI semiconductors to China, including restrictions on computing power. These developments highlight the ongoing battle for dominance and protection of critical technologies between the US and China.

Related:

• ASML Faces New Restrictions on Exporting Advanced Semiconductor Technology to China
• Sanctions on Russia Fail to Stop Flow of Japanese Semiconductors
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(via)

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Last week, we saw several exciting announcements and unveilings in the tech industry. Apple enthusiasts were thrilled to learn more about the possibility of third-party watch faces for the Apple Watch. Meanwhile, Ola, the Indian ride-hailing giant, hinted at the launch of a new electric scooter model, further expanding its eco-friendly transportation offerings.

ASUS, a prominent player in the gaming industry, launched its ROG Ally handheld gaming console in the Indian market, creating anticipation among gaming enthusiasts. Additionally, Xiaomi unveiled its latest tablet, the Xiaomi Pad 6, in India, presenting consumers with a powerful device featuring impressive specifications.

Beyond the realm of technology, international trade dynamics were disrupted as ASML Holding, a leading semiconductor equipment manufacturer, encountered potential export restrictions on advanced chipmaking machines being sent to China. This development reflects the growing scrutiny on technology transfers and highlights the intricate landscape of global trade relations. More on this below.

Here were the Top News Stories from Last Week

• Apple Watch In The News Again For Saving Lives!

The Apple Watch’s heart rate monitoring feature has potentially saved another life by alerting Ohio resident, Kimmie Watkins, of an abnormally high heartbeat during rest. After being notified by her watch, Watkins sought medical help and was diagnosed with a saddle pulmonary embolism (SPE), a highly fatal blood clot condition. The Apple Watch’s life-saving capabilities have been demonstrated in previous instances, including detecting a 12-year-old’s cancer and identifying internal bleeding in a man earlier this year.

• The World’s Largest Fully Functional iPhone

YouTuber Matthew Beem has captured attention with his latest video, “I Built the World’s Largest iPhone.” Standing at around two meters tall, this gigantic iPhone is a combination of various devices, featuring touch panels used for TVs and connected to a Mac mini for full functionality. From taking selfies to using Apple Pay and navigating through New York City, Beem demonstrates how this colossal creation can mimic the functions of a regular iPhone, but on a much grander scale.

• Xiaomi reportedly cancels MIUI 14.5 update

According to recent reports, Xiaomi has dropped plans to release MIUI 14.5 and is instead focusing on MIUI 15, which is expected to be based on Android 14. This means Xiaomi devices that receive the MIUI 15 update will also get an upgrade to Android 14. However, the company has previously delivered newer MIUI versions based on older Android platforms for older smartphones, so there could also be Android 13-based MIUI 15 builds. More information on the software’s new features is expected to emerge as it approaches the testing phase.

• Ola to launch a new S1 electric scooter in July

Ola is preparing to introduce a new electric scooter to its S1 lineup, as teased by CEO Bhavish Aggarwal on Twitter. The teaser hints at an LED headlight design similar to older S1 models and a small front windscreen. However, further details remain under wraps until the official launch in July 2023, part of Ola’s “#endICEAge” event.

• Realme to follow other BBK brands in exiting German market

BBK-owned Realme may exit the German market due to a patent infringement lawsuit by Nokia. The lawsuit, initially aimed at Oppo and OnePlus, caused both companies to halt operations in Germany after a court ruled they violated Nokia’s patents for 4G and 5G signal processing. Realme plans to shift its focus to other European markets like Italy, Poland, Spain, and the Balkans as its presence dwindles in Germany.

• Apple confirms no third-party watch faces for Apple Watch in near future

Apple’s Vice Presidents, Kevin Lynch and Deidre Caldbeck, discuss the company’s commitment to stability over third-party watch face customization for the Apple Watch. Apple prioritizes maintaining the watch face’s compatibility with the operating system, even after major watchOS updates. The interview also touched on the removal of Force Touch due to the introduction of larger screens and user interaction challenges, and the future plans for easier access to the Control Center and a new widget system in the upcoming watchOS update.

• Snapdragon 8 Plus Gen 2 launch timeframe tipped, to arrive with different name

Qualcomm is reportedly developing an enhanced version of the Snapdragon 8 Gen 2 chipset, tentatively named the Snapdragon 8 Plus Gen 2. The chip, manufactured using the TSMC 4nm process, will offer top-tier performance, but its use may be limited due to high costs. The chip is expected to be officially announced next week, with rumors suggesting that the Red Magic 8S Pro, iQOO 11S, and OnePlus Ace 2 Pro could be the first phones to feature this new chip.

• Xiaomi Pad 6 went on sale for the first time last week

Xiaomi’s flagship tablet, the Pad 6, has launched in India, offering a top-tier Snapdragon 870 chipset, an 11-inch 2.8K resolution screen with a 144Hz refresh rate, and up to 8GB RAM and 256GB storage. The Pad 6 is available for purchase from Mi.com, Amazon India, and Xiaomi retail stores, with special discounts for ICICI Bank credit card holders. However, the tablet lacks SIM connectivity, relying solely on Wi-Fi.

• ASUS ROG Ally Handheld Gaming Console announced in India for Rs 69,990, sale starts in July

ASUS has officially announced the ROG Ally handheld gaming console in India, featuring a 7-inch FHD display with a 120Hz refresh rate, a Ryzen Z1 or Z1 Extreme processor, and up to 16GB of LPDDR5 RAM and 512GB of storage. The first sale is set for July 12, with an early flash sale planned for July 7 on Flipkart. The gaming console will also be available at ASUS Exclusive Stores and the ASUS Eshop, with special launch offers for early buyers.

• Google Eyes India for Pixel Production: A Major Shift in Global Manufacturing?

Google is reportedly in talks with potential partners in India to shift some of its Pixel smartphone production from China, a move that follows Apple’s lead in diversifying production. This step aligns with the Indian government’s ‘Make in India’ initiative, promising lucrative incentives to tech companies for local manufacturing. However, it’s still uncertain if these discussions will result in a firm agreement.

• Titan Submarine Vanishes: Steering by a Game Controller?

A tourist submarine from OceanGate Expeditions, dubbed the Titan, which was on an expedition to the Titanic, with five individuals onboard is presumed to be lost. Questions are arising concerning the sub’s unconventional design, which includes the use of a Logitech F710 wireless PC game controller for navigation. Ever since its dissapearance, concerns about the submarine’s safety standards and OceanGate’s previous brushes with safety regulations are coming to light.

• Nothing Phone (2)’s Unique Type C Cable Revealed: 2 Years of Development for Seamless Design and Durability

Nothing, the tech company founded by Carl Pei, has unveiled the key features of its USB Type C cable that will accompany the upcoming Nothing Phone (2). The cable’s design went through a rigorous 2-year development process, with over 20 rejected concepts before achieving a seamless, transparent design. The cable boasts an industry-first molding technique and has undergone more than 25 tests for resistance and durability, surpassing general industry standards.

• ASML Faces New Export Restrictions: Implications for Chipmaking Industry and Global Trade

ASML Holding, Europe’s largest technology firm, is set to encounter additional export restrictions on the shipment of advanced chipmaking machines to China. The Dutch government’s forthcoming regulations will require ASML to obtain export licenses for deep ultraviolet (DUV) lithography systems. With China accounting for a significant portion of ASML’s sales, these restrictions mark a notable shift in trade dynamics and highlight the increasing complexities surrounding technology transfers and international trade relations in the semiconductor industry.

• YouTube Suffers Global Service Disruption: Video Playback and Live Streaming Temporarily Unavailable”

YouTube experienced a widespread service disruption on June 22, 2023, impacting users worldwide and rendering video playback, live streaming, and other functionalities temporarily unavailable. With over 13,000 incident reports recorded on Downdetector, the outage affected regions including the United States, Canada, Europe, and Asia. While YouTube has not provided an official statement on the cause, initial indications point towards technical complications. Services were restored eventually.

• OnePlus Teases Arrival of New Nord Devices in India: Nord 3 5G, Nord CE 3, and Nord Buds 2r

OnePlus has launched a dedicated microsite on its official website, hinting at the imminent release of three upcoming Nord-branded devices in India. The microsite reveals two new smartphones listed as New Nord #1 and New Nord #2, believed to be the Nord 3 5G and Nord CE 3 respectively. The site also confirms the availability of the OnePlus Nord Buds 2r, set to debut on July 5, featuring a semi-in-ear design and multiple color options. Stay tuned for more details as OnePlus unveils further information leading up to the launch event.

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In a significant development, ASML Holding is set to encounter additional export restrictions concerning the shipment of advanced deep ultraviolet (DUV) lithography systems to China. The Dutch government is preparing to announce a fresh set of export controls that will impose limitations on ASML’s chipmaking machines being sent to China. Under the forthcoming measures, ASML will be required to obtain export licenses for the aforementioned systems. 

These stringent regulations, expected to be unveiled next week, signify a notable shift in trade dynamics and may have far-reaching implications for the semiconductor industry. ASML, a prominent player in the chipmaking sector, will likely face challenges and adjustments to comply with the new regulations as it navigates the intricate landscape of global trade. The move reflects heightened scrutiny on technology transfers and underscores the increasing complexities surrounding international trade relations in the tech sector.

ASML, the largest technology firm in Europe based on market capitalization, made significant sales in China, accounting for 14% of its total sales in 2022. Over the past decade, ASML has successfully sold chip lithography equipment worth more than 8 billion euros ($8.46 billion) to Chinese buyers. When companies purchase ASML machines, they also enter into service agreements to ensure ongoing maintenance. The “installed base” segment, comprising these service agreements, contributed approximately 25% to ASML’s global revenue in 2022.

ASML’s machines, valued at tens of millions of euros each, play a crucial role in the chip manufacturing process, enabling the creation of circuits. These machines require unique components and regular maintenance to ensure their operational efficiency and effectiveness in producing high-quality chips. The combination of substantial sales in China and the importance of continuous maintenance agreements highlight the significance of the Chinese market and the vital role ASML’s equipment plays in the semiconductor industry.

The US administration, under President Joe Biden, has been urging the Netherlands and other nations to aid in limiting China’s progress in developing its chip industry, bolstering its military capabilities, and advancing technologies like artificial intelligence and quantum computing. To this end, the US has implemented significant export restrictions on advanced semiconductors and chip-making technologies destined for Chinese companies. In January, Dutch and Japanese officials tentatively agreed to support the US initiative, leveraging their expertise as the world’s leading sources of machinery for producing advanced semiconductors.

What is the primary focus of ASML’s operations?

ASML is a leading innovator in the semiconductor industry, offering comprehensive solutions for chipmakers to achieve high-volume production of patterns on silicon through lithography. With a holistic lithography product portfolio, ASML drives the affordable scaling that fuels the semiconductor industry. Their lithography systems encompass both EUV (Extreme Ultraviolet) and DUV (Deep Ultraviolet) systems, delivering advanced capabilities for precise chip manufacturing. ASML also provides refurbished systems, ensuring cost-effective options for customers. Their metrology and inspection systems offer speed and accuracy, catering to every stage of the manufacturing process from research and development to mass production. Additionally, ASML’s computational lithography expertise further enhances its offerings, enabling efficient and optimized chip production. With its comprehensive range of hardware, software, and services, ASML remains at the forefront of global innovation, supporting the semiconductor industry’s evolving needs.

Related:

• ASML claims Ex Chinese Employee stole Data on Lithography Technology
• China’s Chip Industry Faces Obstacles as Japan Implements Major Export Controls
• Increasing Sanctions on Semiconductor Exports to China may Backfire: ASML Chief

(via)

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ASML has reported that an employee from China stole data on Lithography System Details from its chip machine depository. The employee who worked in ASML’s China-based company allegedly stole data from a repository that stores the company’s technical information. 

ASML has not elaborated on the nature of the theft nor the importance of the stolen data. However, sources report that the breach occurred in the facility that also had the data for the advanced EUV Lithography machines. The lithography machines are one of the hottest items of the decade as they create the chips used in almost everything from smart computing, home devices, EVs, and Communication devices to military weapons and spaceships. 

Dutch Trade Minister Liesje Schreinemacher called the incident economic espionage and said the investigation was underway and they were waiting for the results. 

ASML Holdings is a Dutch multinational corporation that specializes in the development and manufacturing of photolithography machines, used to produce computer chips. As of 2022, it is the largest supplier of the semiconductor industry and the only company in the world that makes and supplies extreme ultraviolet lithography (EUV) photolithography machines used to manufacture the most advanced chips. 

ASML is one of the highest-valued European Tech companies in the world and a key player in the ongoing US-China Tech War. The technology war that started in 2018 when the Trump administration banned Huawei and ZTE equipment is now escalated with the ban on exports of semiconductors to China. The US sanctions prohibit exports of semiconductors, chip manufacturing machines, technical know-how, and personnel to Chinese companies. The Biden administration successfully roped in allies like Japan and Netherlands to also impose these sanctions on China.

US and China are trying to outrun each other in a global technology race and companies like ASML are stuck in the middle of their fight. The Dutch company has already been a target of multiple thefts and data breaches. Last year ASML accused a Beijing-based firm of stealing important data back in 2015. It has also claimed that a company named Dongfang Jingyuan Electron has obtained sensitive technology and transferred it to China. A couple of months back, a male employee was also accused of stealing non-sensitive technical information. 

According to the SCMP report, the most recent attack was on a product life cycle management program known as Teamcenter which stores technical information on product development made by different teams. Teamcenter is a software supplied by Siemens that is used by ASML employees. 

Both ASML and Siemens have declined to comment on the incident. It is still not clear, how the employee stole the data from Teamcenter and whether or not he has any connections with the Chinese government or military. However, the latest data theft has escalated the trade war. The US and its allies are labeling the incident as espionage and have involved top-level diplomats in the investigation. 

• ASML Expects to Continue Business with China Despite US Pressure
• Increasing Sanctions on Semiconductor Exports to China may Backfire: ASML Chief
• Semiconductor Industry Association asks Japan and Netherlands to Tighten Curbs on China

(via)

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The US-China tech war is getting interesting with the US, Japan, and Netherlands engaging in diplomatic talks to increase the sanctions on semiconductor exports to China. The US is pressurizing Japan and Netherlands to increase the already long list of sanctions and practically ban any export of machinery, technology, personnel, and technical know-how to the Asian giant, which is the largest consumer of semiconductors in the world. 

The existing sanctions have already affected the global semiconductor industry, especially major suppliers like ASML Holdings of the Netherlands and Tokyo Electron of Japan. 

ASML CEO, Peter Wennink said that if we keep on increasing the sanctions, China will eventually learn how to produce its own chips. It is just a matter of time before they learn how to make semiconductor manufacturing equipment and become completely self-reliant. 

He further added that “The more you put them under pressure, the more likely it is that they will double up their efforts.” 

China’s History of Self-Reliance

A quick peek into history will show you that China is capable of going completely independent. China’s space program, high-speed railway, communication, 5G technology, and automotive industry all bear witness to the country’s capacity to grow and become self-reliant. Recently, Goldman Sachs economist also predicted that China’s GDP will surpass the US in 2035. All of these indicate that the country has the ability to go solo and may have already started the process. 

In December,  Reuters reported that China was already preparing a $143 billion package for its semiconductor industry, to enable local entrepreneurs and companies and counter the US curbs. 

Last year Shanghai-based firms also achieved the milestone of mass-producing semiconductors with a 14nm process and made breakthroughs in 90-nm lithography machines, 5-nm etching machines, 12-inch large silicon wafers, central processing units, and 5G chips. China’s Semiconductor Manufacturing International Corp has also started exploring sub-10nm manufacturing techniques.

China’s Semiconductor Industry

Semiconductors are one of the hottest technology items of this decade. All the major technology sectors, like wired communication, consumer electronics, industrial electronics, automotive electronics, wireless communication, and computing and data storage, require semiconductors. 

China, which aims to become the global leader in artificial intelligence and quantum computing, needs an uninterrupted supply of semiconductors to achieve this goal. However, the pandemic restrictions and the ongoing US sanctions have unveiled the loopholes in China’s supply chain, further strengthening Beijing’s belief that autonomy in the semiconductor industry is the only way to achieve global dominance.  

Currently, China’s semiconductor industry includes a wide variety of companies from Fabless semiconductor firms like ZhaoXin, UNISOC, and HiSilicon to IDMs (Integrated Device Manufacturers) like Yangtze Memory Technology Corp and ChangXin memory Technologies.

However, even though these companies can design semiconductors, they lack the technology and capacity to mass produce them, especially the cutting-edge chips required for Artificial Intelligence and other advanced technology. 

For instance, China like every other country relies on ASML to supply the complex EUV (Extreme Ultraviolet Lithography) machine, required to create advanced semiconductors. EUV is used to mass produce the most advanced microchips (7 nm, 5 nm, and 3 nm nodes). 

Under the current sanctions, ASML is not allowed to sell the EUV or share related technology, material, or personnel with any Chinese company. However, the country circumvented this issue by using the DUV lithography system, which is still imported. 

Impact of the Additional Sanction

Now, US wants the Japanese and Dutch government to further widen their sanctions. Talks are going on to ban the exports of DUV lithography machines and related technology. If approved, these sanctions may cripple China in the short term but will actually have a worse effect on Dutch and Japanese companies as they stand to lose more than China in this bargain. 

Tokyo Electron, one of the largest semiconductor companies in Japan, gets around 25% of its revenue from exports to China. ASML has 14% of its revenue and 15% of order backlogs from China. Any additional sanctions will adversely affect the business of these two major semiconductor suppliers. 

If approved, the new sanctions will help US to stop the technological and economical advancement of China. In the short term, it is going to be very difficult for China to sustain and develop its semiconductor industry under the mounting pressure of sanctions. However, if we look at Beijing’s track record, then we can presume that the country will fight back and may even change the whole semantics of the global semiconductor industry in the coming years.

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(Source)

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Earlier today, ASML, a Dutch semiconductor equipment maker, said that the company sees demand for its products remaining strong in China, with around 2 billion euros ($2.3 billion) in sales in 2021.

According to a report published by the Economic Times, the Chief Financial Officer of ASML, Roger Dassen, said that ASML, which is currently operating at maximum capacity amid the ongoing global chip shortage, thinks that the sales levels will remain the same in China for the upcoming year of 2022.

He stated that “For next year I wouldn’t expect a dramatic increase in that numbers, but we would expect that number to be sustained, so also next year pretty strong sales.”

For those unaware, ASML Holding engages in the development, production, marketing, sale, and servicing of advanced semiconductor equipment, consisting of lithography-related systems, which is the technology used to create the circuitry of computer chips.

Due to growing trade tensions between the U.S. and China and the concerns of the U.S. military, the allied Dutch government has not granted ASML permission to conduct sales of its most advanced lithography equipment with China. However, Chinese companies are major buyers of ASML’s earlier generation products due to the relatively recent drive to make homegrown chips for self-sustenance and compete internationally.

Peter Wennink, the CEO of ASML Holding, has previously stated that trying to control chip and technology exports to the region (China) will be detrimental to the U.S.

Roger Dassen, however, stated that “if for whatever reason, something were to happen on the China front, for instance more stringent regulations…in all likelihood that demand would be hoovered up someplace else.”

The CFO also added that ASML was weighing how much extra capacity the company would need to meet the increasing demand for its products as a result of plans by the United States, European Union, and other governments to increase regional semiconductor manufacturing capacity due to strategic considerations.

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ASML CEO believes that the attempt to control the export of chips to China will not work. The executive said that this would not only fail to hinder the region’s technological progress but also end up hurting the US economy as well.

According to a Bloomberg report, Peter Wennink, the CEO of ASML Holding believes that trying to control chip export to the region will be detrimental to the US. This move arrives amid growing trade tensions between the US and China, which had also led to restrictions on the sale of the Dutch company’s advanced equipment to Chinese firms. The senior official said that “I believe that export controls are not the right way to manage your economic risks if you have determined that there is an economic risk,” during an online event.

The executive further argued that “you close China from access to technology, that will also cost non-Chinese economies a lot of jobs and a lot of income.” Wennink believes that while it may take China a while to build its own semiconductor equipment and technology due to lack of access to foreign technology, non China based firms will be barred from one of the world’s largest chip markets.

In other words, this would harm even US based companies that trade with China. The CEO also stated that ending ties with China completely could probably cost anywhere between 80 billion to 100 billion US Dollars in sales. Furthermore, it could also affect 125,000 jobs in the US as well, as per estimates from the US Commerce Department.

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• Taiwan says Chip firms will comply with new US rules that blacklists Chinese companies

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An industry expert has weighed in on the global semiconductor shortage that has affected the auto industry gravely, leading to loss of jobs and significantly reduced earnings. According to an exec of equipment maker ASML, the surge in the demand for chips leading to supply dislocations and a dip in car production numbers are indicative of a wider problem that is placing strains on suppliers across the semiconductor sector.

Ron Kool, executive vice president at ASML stated that there had been a higher demand for lower technology computer chips, a bit stronger and beyond the expectations of most chipmakers and industry watchers in the coronavirus pandemic era.

ASML has shown a solid growth pattern in recent years and is presently Europe’s largest in the industrial tech segment, by market value. ASML is a major supplier of machinery to some of the leading global chipmakers like Samsung, TSMC, and Intel.

The impact of the shortage has been quite evident in the auto industry, as semiconductors shortages have forced several carmakers to review downwards their production benchmarks even in the face of rising demand for cars globally.

Kool feels that the global chip shortage, therefore, goes beyond supply logistics and other extraneous factors but could indicate a shift in demand patterns for chips. According to Kool, it is looking increasingly likely that indeed a wide range of emerging and traditional outlets will underpin the demand trajectory for chips, stressing that short-term mitigation of the shortages being contemplated by a number of governments may just be tokenistic.

The shift towards previous generation chipmaking technology was reflected in the Q4 earnings numbers of ASML, which saw a spike in the demand for previous-generation chip producing machinery, driving the impressive revenue figures of the company.
However, Kool says that the strong Q4 performance of the company may not be sustainable except there is substantial demand for cutting-edge machinery for the production of next-generation semiconductors.

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Chinese tech companies have been accused of many things in recent times, one of which is intellectual property theft. Recently, it was reported that some persons suspected to Chinese nationals stole software from Dutch chip manufacturer ASML. In no distant time, the news was carried by Dutch newspaper Financieele Dagblad. Some local politicians even suggested that it might be state-sponsored espionage. All that has changed as ASML CEO Peter Wennink has finally revealed who they discovered was responsible for the intellectual property theft.

In an interview on Dutch television, the CEO refuted the earlier rumour that China was responsible. Wennink instead reportedly disclosed that the heist was carried out by its biggest Korean customer. That happens to be Samsung even though the CEO left off short of mentioning the name of the company, even when prodded by the interviewer. Wennink also hinted that the company was able to reach that damning conclusion through the aid of an external independent investigator to unravel who was behind the theft. This rules the espionage as ordinary business espionage and not state espionage.

The theft was apparently executed by former Chinese employees of the chip giant who stole the software to set up their own company named Xtal based in the US. The company was aimed at taken on ASML and to provide Samsung with a cheaper alternative. Samsung allegedly holds a 30% share in the startup. The software in question is a vital tool for setting up chip machines for optimum production of electronic chips.

An official statement from Samsung sent via e-mail to LetsGoDigital read; “Samsung makes it a top priority to protect and respect the intellectual property rights of others. We are deeply disappointed at media reports that had widely assumed or even suggested of Samsung’s involvement in any wrongdoing against ASML, which are not true. While we cannot disclose details of our business deals, Samsung had made precautions so as to adhere to all laws and regulations with its development contract with Xtal, including a clause that specifically prohibits the illegal use of 3rd-party IPs. All products that have resulted from our partnership with Xtal do not interfere with ASML’s IPs. We would also like to clarify that, unlike media reports, our partnership with ASML has remained strong without discontinuation”.

Read Also: Leak shows Samsung Galaxy A60 has a punch hole display and Snapdragon 675 processor

Samsung still remains one of ASML’s major clients and we don’t know how this damning allegation will affect their partnership.

(source)

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