The alliance of the USA, Japan and the Netherlands in banning the sale of latest-generation scanners to China could halt the Middle Kingdom’s development plans for advanced semiconductors. Or stimulate national production?
A triple deal is set to thwart China’s ambitious development plans in cutting-edge processor design. According to Reuters, the USA would have won over Japan and the Netherlands in the establishment of a mechanism to ban the export of the latest generation steppers. These huge machines which are the only ones capable of burning the processors of your smartphones, computers, 5G relays or even automotive chips.
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And you will have understood it, all the companies designing steppers (or lithographic scanners in French) either American, Japanese or Dutch – the giant ASML being even the only one to master the EUV steppers which design all the chips whose circuits are less than 7 nm. Less cutting edge, but extremely important for all nodes between 65nm and 10nm, Nikon and Canon would soon, like ASML, be banned from selling steppers to China. Depriving the latter of production capacity on its soil. And thus forcing its companies to trade with Taiwan or South Korea, the only two countries currently able to burn the latest processors and memory chips.
A trade balance to be found against a (very) aggressive China
While an agreement could be reached by the end of the month to formalize this export ban, the USA must navigate intelligently to harm businesses in the three countries as little as possible. In addition to stepper manufacturers, a whole ecosystem of companies will suffer, such as Tokyo Electron, a Japanese supplier of complementary scanner machines. An actor for whom China accounts for a quarter of sales and for whom, as for Nikon or Canon, will have to receive compensation in one form or another from their government for the shortfall.
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A shortfall that is very real: the most expensive machines, those of TSMC, cost up to 180 million euros each. The construction of a latest generation factory costing between 10 and 20 billion dollars, the shortfall in the targeted countries is real. But the risk of the rise of China in the field of chips is also. Because the blocking approach of the USA vis-à-vis China is not limited to a simple commercial confrontation or a desire to limit its technological independence. It is also linked to the military uses that the Chinese can make of chips, coupled with the growing aggressiveness of Xi Jingping’s regime. A Chinese leader who has already shattered the term limits of his predecessors. And who openly expresses his expansionist desires, in particular to the detriment of Taiwan – the world’s number one chip producer – which he believes he can take by force if necessary.
The possible, but difficult and improbable, path to Chinese autonomy
Some point to the fact that China’s policy of technological isolation from the USA, Japan and the Netherlands could lead China to design its own machines and technological solutions for the production of chips. If there are precedents for technological independence acquired in this way – we are thinking here of nuclear programs (India, Pakistan, North Korea) or ballistic programs (Iran, North Korea, etc.) – the production of semiconductors and a fortiori in the field of extreme ultraviolet rays is another matter.
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If China develops its own space launchers, has its own space station, its own Mars rover, etc. It communicates little to the outside about its real scientific advances. In addition, the production of chips below 7 nm (we will soon reach 3 nm!) is such a complex industry that no country has mastered all aspects. The US has control of software, intellectual property and some machinery. The Japanese are the kings of chemistry, metrology and wafers. As for the Dutch, they are the only ones to master the manufacture of EUV steppers. Faced with such complexity, cooperation is key. Self-sufficient development in China seems, although theoretically possible, very hard to achieve… And not necessarily profitable if the blockade intensifies.
It remains to be seen, if there is a final agreement between the three countries, what China’s response to this embargo will be. Which proceeds, undeniably, from a strategy of technological warfare.
Reuters
