China has reportedly succeeded in the domestic production of deep ultraviolet (DUV) lithography equipment, a critical tool in semiconductor manufacturing. Following the successful listing of CXMT (Changxin Memory Technologies), the largest DRAM producer in China, the semiconductor industry in the country is experiencing a wave of positive developments. This progress has had a significant negative impact on the stock prices of South Korean semiconductor companies, with Samsung Electronics' shares dropping 13.4% and SK Hynix's shares falling 14.7% on July 28.
According to The Information, a U.S. IT news outlet, a Chinese semiconductor equipment company has begun producing its own immersion DUV equipment, with plans to deliver five units to customers this year. The production will supply major Chinese semiconductor firms, including SMIC (Semiconductor Manufacturing International Corporation), Hua Hong Semiconductor, and CXMT. This marks the first time a Chinese company has manufactured immersion DUV equipment. The Information also reported that 20 units are expected to be shipped next year.
Domestic Production of DUV Achieved After Seven Years of U.S. Sanctions
The United States has prohibited the export of advanced extreme ultraviolet (EUV) lithography equipment to China since 2019, and since 2023, it has also banned the export of immersion DUV equipment. China has been focused on domestic production of lithography equipment since 2019, achieving success in DUV production after more than seven years.
Immersion DUV lithography can produce semiconductors with a 28-nanometer process in a single exposure. If multiple patterning techniques are employed, it can cover down to a 7-nanometer process. However, multi-patterning has drawbacks, including lower yield rates and higher manufacturing costs.
The immersion DUV technology was introduced to the market by Dutch lithography company ASML in 2006. The equipment being produced by the Chinese company is expected to have performance similar to ASML's 2008 version of immersion DUV, indicating a technological gap of approximately 18 years between ASML and Chinese manufacturers.
Prospects for EUV Equipment Development by 2030
Despite the significant technological gap, the successful domestic production of DUV is seen as a major achievement for China, indicating that the country has completed the localization of 28-nanometer semiconductor processes. Analysts predict that China will accelerate its development of EUV lithography equipment based on this success.
The Chinese government has set 'technological self-reliance' as a key goal in its 15th Five-Year Plan (2026-2030), with the development of EUV lithography equipment being the most critical task. While the government has not specified a timeline for development, local semiconductor industry insiders expect to see results from EUV equipment development by 2030.
Huawei Affiliate Identified as DUV Developer
The name of the Chinese DUV equipment manufacturer has not been disclosed. However, there is speculation that it is a subsidiary of Huawei, known as Yuliangsheng. In September of last year, the Financial Times reported that SMIC was testing immersion DUV equipment produced by Yuliangsheng, with initial test results showing promising indicators.
Yuliangsheng is 50% owned by a venture capital firm under the Shanghai municipal government, while the other 50% is held by Chinese semiconductor equipment company Sincere. Sincere is fully owned by a venture capital firm under the Shenzhen municipal government. Given that Sincere's core team consists of members from Huawei's precision equipment development team, the Chinese industry considers Sincere to be affiliated with Huawei. Sincere is also developing EUV equipment, although it is unclear whether it is doing so independently or in collaboration with Yuliangsheng. The project name for Sincere's EUV development is 'Everest.'
CXMT Intensifies Competition in HBM Market
Meanwhile, CXMT, which went public on July 27, saw its stock price surge by 476% on its first day, making it the top company by market capitalization on the Chinese stock market. CXMT is expected to raise up to 666 billion yuan through this listing, and with a projected net profit of 57 billion yuan for the first half of the year, the company is set to have a total of 1.236 trillion yuan in cash. Most of this is expected to be invested in AI-related DRAM and high-bandwidth memory (HBM), positioning CXMT to better compete with Samsung Electronics and SK Hynix.
Currently, the technological gap between CXMT and SK Hynix is estimated to be around four years. Analysts from Chinese securities firms believe that with substantial investment resources, government support, and explosive demand from Chinese AI companies, CXMT's technological capabilities could advance significantly. There are even projections that the technology gap between CXMT and SK Hynix could narrow to two years in the future.
* This article has been translated by AI.
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