U.S. restrictions on China's semiconductor sector have expanded beyond extreme ultraviolet (EUV) to deep ultraviolet (DUV) lithography equipment, drawing renewed attention to China's push for self-sufficiency in chipmaking tools. After reports that China deployed domestically developed DUV lithography equipment on production lines, semiconductor-related stocks, including Samsung Electronics and SK hynix, broadly weakened on Korea's stock market.
According to the semiconductor industry on the 30th, there is a considerable gap between market concerns and China's actual technological level. While China has made meaningful progress in localizing DUV tools, analysts say formidable technological hurdles remain in advanced processes needed for AI Semiconductor chips and high-bandwidth memory (HBM).
Lithography equipment draws semiconductor circuits onto wafers and is often called the "printer" of chip fabs. Because a chip's performance is determined by how precisely it can draw ultra-fine circuits, lithography is considered core to semiconductor manufacturing. EUV tools are currently used for AI Semiconductor chips, but DUV systems are still widely used in mature processes for automotive semiconductors, power semiconductors and commodity DRAM.
Chinese chip equipment maker Shanghai Micro Electronics Equipment (SMEE) has achieved localization of mature-node tools by supplying its self-developed 28-nanometer (nm)-class DUV lithography system "SSA800" to major foundries such as SMIC and Hua Hong Semiconductor. Some assess that the company has begun to reduce partial dependence on Netherlands-based ASML equipment as it secures a certain level of mass production for legacy chip output such as automotive semiconductors, power management ICs (PMICs) and microcontrollers (MCUs).
However, "localization success" does not mean it has caught up with ASML. The equipment's performance shows clear limits. The SSA800's wafer throughput is 150 wafers per hour, only about half that of ASML's comparable tool (275 wafers). Overlay accuracy also lags. While it can secure stable Production yield at the 28 nm node, yields are said to drop sharply when double or multiple patterning required for 14 nm and below is applied. The industry still sees significant technological constraints for mass production of advanced logic chips and AI Semiconductor devices.
Simply put, China's DUV tools can be used to produce legacy products such as automotive semiconductors and commodity memory, but they still fall short for reliably producing HBM used in Nvidia's AI accelerators or state-of-the-art AI Semiconductor chips.
In particular, immersion (ArF Immersion) DUV and EUV technologies required for ultra-fine nodes have yet to reach full localization. With high difficulty in core technologies such as optics and light-source stability, many expect it will not be easy to narrow the gap with ASML in a short period.
The United States is also toughening restrictions to block China's catch-up. Congress is pushing the MATCH bill, which would restrict not only DUV equipment sales but also maintenance and parts supply. If enacted, analysts say it could burden the long-term operation of DUV equipment already installed in China.
In memory semiconductors, the moves of China's largest DRAM maker, ChangXin Memory Technologies (CXMT), are drawing attention. CXMT has recently secured investment funds through a large initial public offering (IPO) and is expanding production of commodity memory such as DDR4 and DDR5. HBM, however, is different. Without EUV, securing Production yield with DUV multi-patterning alone is difficult, and because TSV stacking, heat dissipation and long-term reliability must also be assured, the industry consensus is that it will be hard to catch up with Samsung Electronics and SK hynix in the short term.
China's pursuit is affecting Korea's memory sector as well. In the commodity DRAM market, expanded supply from Chinese companies is intensifying price competition. Meanwhile, U.S. restrictions on China have limited upgrades to advanced processes at Samsung Electronics' Xi'an plant and SK hynix's Wuxi and Dalian plants, making changes unavoidable in their strategies for operating production bases in China.
In response, Samsung Electronics and SK hynix are rapidly restructuring their businesses to focus on high value-added products such as HBM4, next-generation DRAM and advanced packaging, while reducing the share of commodity memory. By concentrating EUV-based investments in domestic production hubs such as Pyeongtaek and Yongin, they aim to further widen the technology gap in the AI memory market.
China's DUV localization is viewed as a meaningful achievement in legacy semiconductors. While many assess it is not enough to upend competition in AI Semiconductor and HBM markets in the short term, some say continued localization of equipment and expansion of memory production could bring notable changes to the global semiconductor supply chain and price competition. The industry expects the pace of China's technological advancement, additional U.S. restrictions, and the "extreme gap" strategies of Samsung Electronics and SK hynix to shape the competitive landscape ahead.