duv

The Financial Times of the UK reports that Huawei is becoming more deeply involved in the domestic photolithography machine supply chain, not only investing in related equipment and component companies but also coordinating suppliers, wafer fabs, and complete machine manufacturers to promote domestic DUV into actual production lines. Bernstein analysts describe Huawei as the "project manager" for China's DUV projects.The fastest progress is being made by Shanghai Yuliangsheng. The company is involved in the development of domestic advanced DUV, with equipment already tested at wafer fabs such as SMIC and Huawei's own production lines, planning to produce 12 units by the end of this year. At this stage, the focus is primarily on simpler chips, with the ultimate goal of being used for advanced AI chip manufacturing.Currently, domestic DUV has not completely eliminated reliance on overseas supply chains. The projection lenses used by Yuliangsheng still come from Germany's Zeiss, and high-power light sources are also a major bottleneck. Huawei has invested in companies such as Qiqi Photon and Keyihongyuan to supplement domestic lenses and light sources.

According to the Financial Times, citing informed sources, Chinese memory chip manufacturers Changxin Storage and Yangtze Memory Technologies have purchased enough deep ultraviolet lithography machines (DUV) from ASML to meet their expansion plans for the next three years.

According to Bloomberg, UBS analysts expect that China's semiconductor manufacturing capabilities may struggle to make sufficient progress in the next decade to develop solutions that can truly replace ASML's cutting-edge EUV lithography technology. UBS analysts wrote in their report, "The stage they are currently at seems comparable to ASML's in 2004." Based on patent application activities, especially in the fields of light sources and laser subsystems, China's current technological maturity is roughly equivalent to ASML's level 15 years before it began mass production of EUV equipment.UBS also expects that China is likely to have the capability for mass production of immersion DUV lithography machines within the next two to five years. Although immersion DUV is not as advanced as EUV, it remains an indispensable tool in chip manufacturing. ASML's immersion DUV machines are priced at nearly $90 million, while EUV equipment costs over $200 million each. China is one of ASML's largest markets, but due to export restrictions, ASML is prohibited from selling EUV equipment to China. UBS pointed out that considering the yield and capacity gaps and regulatory restrictions, Chinese lithography equipment is unlikely to be applied overseas. An ASML spokesperson did not respond to requests for comment. The report is based on UBS analysts' predictive views, and actual progress will depend on industry dynamics.

Citrini analyst Jukan posted on social media that the news of China's progress in DUV lithography technology is not particularly surprising, as the market had already formed certain expectations. He pointed out that The Information's related report only cited a professor from a transportation university in China speaking at an internal meeting in June and did not disclose more substantial information. Jukan believes that the sell-off reaction seen in semiconductor equipment stocks like ASML is an overreaction to this news.According to previous reports, The Information cited sources saying that a state-owned enterprise supported by Chinese state capital has begun mass production of domestically developed DUV (Deep Ultraviolet) lithography manufacturing equipment, marking a key progress in the localization of China's semiconductor industry.Insiders stated that the enterprise plans to produce about 5 domestically made DUV lithography machines by 2026 and expand to about 20 machines by 2027. Although there is still a gap compared to the 131 immersion DUV lithography systems delivered by Dutch lithography giant ASML last year, the entry of domestic equipment into mass production is seen by the market as an important breakthrough in the localization of China's chip supply chain.

According to a report by The Information citing informed sources, a Shanghai state-owned company whose name has not been disclosed has begun producing domestically-made immersion DUV lithography machines, planning to manufacture about 5 units this year and increase to about 20 units by 2027. The first batch of equipment will be delivered to major foundries such as SMIC, Hua Hong Semiconductor, and ChangXin Technology, but the equipment still needs to undergo verification for accuracy, stability, and production line compatibility, a process that may take several months or even longer.Currently, most components of the equipment come from domestic sources, but some key parts still rely on Japan, and the performance and manufacturing quality lag behind ASML. In comparison, ASML is set to deliver about 131 immersion DUV lithography machines as early as 2025. Although domestic equipment has made the leap from prototype testing to small-scale production, there is still a significant gap before it can replace ASML on a large scale. Previously, Reuters reported that the U.S. is considering tightening restrictions on the export of lithography equipment to China and on maintenance services in China, and the delivery of domestic equipment coincides with this backdrop.