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Advanced chip in Huawei smartphone produced on ASML machines: sources
SMIC used ASML’s less-advanced DUV machines together with tools from other companies to make the chip used on Huawei's new 5G smartphones, according to people familiar with the matter.
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- China’s SMIC used ASML’s less-advanced DUV machines together with tools from other companies to make Huawei’s 5G-capable chip, sources say
- ASML will be restricted from January to ship some of its most advanced DUV lithography machines to China
Huawei Technologies’ Mate 60 series smartphones displayed at the company’s flagship store in Beijing
China’s Semiconductor Manufacturing International Corp (SMIC) used equipment from ASML Holding to manufacture an advanced processor for Huawei Technologies' new 5G smartphones that alarmed the US, according to people familiar with the matter.
In a suggestion that export restrictions on Europe’s most valuable tech company may have come too late to stem China’s advances in chip making, ASML’s so-called immersion deep ultraviolet (DUV) machines were used in combination with tools from other companies to make the chip for Huawei, the people said, asking not to be identified discussing information that is not public.
ASML declined to comment. There is no suggestion that their sales violated export restrictions.
The firm’s shares dropped as much as 2.1 per cent in Amsterdam after the report, and were trading 0.6 per cent lower at €558.5 (US$591) apiece as of 3.54pm local time.
The ASML global headquarters in Veldhoven, Netherlands. Photo: Bloomberg
The US has been working with Japan and the Netherlands to prevent China from accessing advanced semiconductor technology of the kind demonstrated in the 7-nanometre chip that powers Huawei’s Mate 60 Pro series to curb the country’s technological advancement and prevent it from gaining a military edge.
Despite those broad restrictions, Huawei surprised the world in August when it quietly introduced its new 5G smartphone with a cutting-edge processor. A teardown of the device conducted by TechInsights for Bloomberg News revealed the chip was produced by SMIC, demonstrating manufacturing capabilities well beyond where the US had sought to stop China’s advance.
That prompted questions both about how SMIC was able to manufacture the chip, and the effectiveness of the Washington-led controls. SMIC did not respond to a request for comment.
ASML occupies a pivotal role in the global chip supply chain. It has a monopoly on advanced extreme ultraviolet lithography systems, or EUVs, that are indispensable to the production of the most cutting-edge chips, and it also supplies the DUV machines needed to make more mature semiconductors.
ASML has never been able to sell its EUV machines to China because of export restrictions. But less-advanced DUV models can be retooled with deposition and etching gear to produce 7-nm and possibly even more advanced chips, according to industry analysts. The process is much more expensive than using EUV, making it very difficult to scale production in a competitive market environment.
In China, however, the government is willing to shoulder a significant portion of chip-making costs. Chinese companies have been legally stockpiling DUV gear for years – especially after the US introduced its initial export controls last year before getting Japan and the Netherlands on board.
Pressure from President Joe Biden’s administration pushed the Dutch government last summer to announce plans to prohibit ASML from shipping three out of four of its most advanced-model immersion DUV lithography machines, its second-most capable category of machinery, to China without a licence. ASML is still able to export those products to China at the moment but the shipments will be prohibited from January.
According to an investor presentation published by the company last week, ASML experienced a jump in business from China this year as chip makers there boosted orders ahead of the export controls taking full effect in 2024. China accounted for 46 per cent of ASML’s sales in the third quarter, compared with 24 per cent in the previous quarter and 8 per cent in the three months ending in March.
New controls that the Biden administration announced this month further limit the exports of DUV machines.
The regulations use a unilateral authority called a de minimis rule to control the sale of specified foreign-made lithography machines that contain any amount of American materials, said Stephen Bartenstein and Peter Lichtenbaum, export control specialists at law firm Covington & Burling, without commenting on the companies affected.
ASML chief executive Peter Wennink told investors last week that together, the new US and Dutch curbs will affect up to 15 per cent of the firm’s sales in China.
Under the new rules, ASML can still ship its less advanced NXT:1980Di machine to Chinese facilities that make older chips, according to Wennink. But it cannot sell to fabs that produce semiconductors near the cutting edge.
That rule affects ASML shipments to six fabs in China, according to people familiar the matter – including one SMIC facility. It is unclear whether that is the facility that produced the 7-nm chip for Huawei, and the US Bureau of Industry and Security did not respond to questions on the matter.
A Huawei flagship store in Shanghai. Photo: Bloomberg
) which is why we can restrict the machine's sales.
