Netherlands, Japan and US Squeeze China’s Chipmaking Ambitions as  2-Nanometer Race heats up

According to reports, three out of ASML's four immersion lithography systems will be restricted by the new rules, preventing Chinese chip manufacturers from commercially producing chips smaller than 28 nanometers. That means even non-cutting-edge equipment is now being subjected to restrictions.

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Joseph P Chacko
Joseph P Chacko
Joseph P. Chacko is the publisher of Frontier India. He holds an M.B.A in International Business. Books: Author: Foxtrot to Arihant: The Story of Indian Navy's Submarine Arm; Co Author : Warring Navies - India and Pakistan. *views are Personal

This summer, the United States, Japan, and the Netherlands are joining forces to restrict further the export of chip manufacturing equipment to Chinese chip manufacturers, claiming to “prevent China from enhancing the military power of the People’s Liberation Army using their technology.” The latest action comes from the Netherlands in Western Europe.

The Dutch government announced on June 30 that it would implement new export control measures on certain advanced semiconductor manufacturing equipment. Dutch Minister for Trade, Schreinemacher, stated that these devices could potentially be used to produce military equipment, and she added that it was To safeguard national security.

The new measures will take effect on September 1, requiring companies that produce advanced chip manufacturing equipment to obtain a license before selling such equipment overseas. The announcement also includes a technical document detailing which equipment requires a license.

According to reports, three out of ASML’s four immersion lithography systems will be restricted by the new rules, preventing Chinese chip manufacturers from commercially producing chips smaller than 28 nanometers. That means even non-cutting-edge equipment is now being subjected to restrictions.

Schreinemacher stated that the new regulations would affect only a small number of companies and equipment models. He estimated that there would be approximately 20 export license applications per year, thus limiting the impact on the affected companies.

He also said that these control measures are “country-neutral.” In other words, the Netherlands asserts that the measures are not specifically targeting any particular country.

On the same day, Dutch semiconductor equipment manufacturing giant ASML announced that it expects its second-tier advanced deep ultraviolet (DUV) lithography equipment also to require an export license. These devices are used in the production of computer chips.

ASML in the Netherlands is the only company in the world able to produce extreme ultraviolet lithography devices (EUV), which are required for chips with seven nanometers or fewer dimensions. China has always desired to acquire cutting-edge equipment, but it has always been challenging. The most recent restrictions announced by the Netherlands prohibit not only the export of extreme ultraviolet lithography machines to China but also immersion deep ultraviolet lithography equipment (DUV), which is not as advanced as extreme ultraviolet lithography machines because the chips produced by these machines can still be used for military purposes.

China Responds

The Chinese Ministry of Commerce said in a statement on July 1 that the Dutch side should act in a way that keeps international economic and trade rules and China-Netherlands economic and trade cooperation. The Ministry said that the Dutch should respect market principles and the spirit of contracts, avoid actions that stop the normal cooperation and growth of the semiconductor industries in both countries, stop abusing export control measures, and protect the interests of Chinese and Dutch companies as well as the interests of both sides. The Ministry says this will help stabilise the global semiconductor business’s supply chain.

Before the statement from the Chinese Ministry of Commerce came out, on June 30, a spokesperson for the Chinese Ministry of Foreign Affairs, Mao Ning, criticised the United States at a routine press conference for having a vague idea of national security and abusing export controls under different pretexts to try to force China into a technological blockade.

Mao Ning said China would closely monitor the situation and stand up for its legal rights and interests.

US to tighten sanctions

Reuters says that at the end of July, the US will announce new rules requiring American companies to get licences before sending chip-making equipment to six Chinese companies, including a wafer fab run by SMIC, China’s biggest chipmaker.

In October 2022, the US set rules to limit the export of chip-making equipment to China, claiming concerns about national security. US citizens couldn’t work for Chinese chip makers with these rules either. After putting these limits in place, the US tried to get other chip-making countries to do the same.

For making modern semiconductors, the United States, Japan, and the Netherlands are some of the best places to get the necessary equipment and specialised knowledge. Companies like Applied Materials, KLA, and Lam Research, which are based in the United States, make some of the most important chip tools in the world. Japan’s Nikon, which makes a lot of optical tools, and Tokyo Electron, which makes a lot of equipment for semiconductors, are also important providers. Japan has already restricted the sale of 23 types of equipment used to make semiconductors. These restrictions will go into effect on July 23.

2mm Chip race begins

As the United States, Japan, and the Netherlands constrain China, the race for 2-nanometer chips has begun.

According to reports, Samsung Electronics of South Korea recently announced its schedule for mass production and application of 2-nanometer semiconductors, with mass production expected in 2025. They plan to apply the 2-nanometer technology to high-performance computing products in 2026 and expand it to the automotive sector by 2027.

Regarding 2-nanometer chips, Taiwan Semiconductor Manufacturing Company (TSMC) has stated that its progress in 2-nanometer technology is better than expected, and it aims to achieve trial production in 2024 and mass production in 2025.

In addition, Intel from the United States and Rapidus from Japan are also targeting 2-nanometer technology.


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