Peter Wennink, former CEO of ASML, recently stated in an interview with Dutch broadcaster BNR that the chip war between China and the US lacks factual basis and is entirely driven by ideology. According to reports from Reuters and the Commercial Times, Wennink also anticipated that this chip war will not be resolved anytime soon and could potentially persist for decades.

The global EUV lithography supplier ASML stands out as the world’s largest and most advanced EUV company, as both TSMC and Samsung utilize EUV equipment for manufacturing, covering TSMC’s 7nm, 5nm, and 3nm processes and Samsung’s EUV Line (7nm, 5nm, and 4nm), along with the 3nm GAA process.

Wennink further emphasized that ASML has been operating in China for over 30 years, serving numerous customers and employing a large workforce locally. Therefore, the company feels obligated to protect the rights and interests of its customers and employees.

He acknowledged striving to maintain a balance between the US and China during his tenure, advocating on one hand for the US government to relax export restrictions and on the other hand raising concerns with Chinese officials about intellectual property infringements.

According to the reports, Wennink brought up the concerns from the U.S. authority about which party he sided with. Wennink noted that officials in Washington might sometimes think he’s friend of China. However, he is a friend to ASML’s customers, suppliers,  employees and shareholders. He then forecasted that given geopolitical interests are at stake, the chip war could take decades to play out.

Before retiring in April this year, Peter Wennink led ASML for a decade, transforming it into Europe’s largest semiconductor equipment manufacturer. During his tenure, China’s semiconductor influence rapidly grew, becoming ASML’s second-largest customer outside of Taiwan.

Since imposing export restrictions on China in 2018, the US has gradually expanded the list of controlled product categories, thus impacting ASML. In April this year, the US announced the latest round of export restrictions, limiting ASML’s ability to service high-end products already shipped to China.

At the time, Wennink emphasized that these new restrictions would not significantly impact ASML’s financial performance from 2025 to 2030, as only a small portion of its Chinese customers would be affected

Besides Netherlands, a previous report from Reuters on June 19 also mentioned that Japan, home to several chip equipment manufacturers like Nikon and Tokyo Electron, imposed restrictions on the export of 23 types of machinery to China to align with U.S. government policies aimed at curbing China’s technological advancements.

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(Photo credit: iStock)

Semiconductor equipment giant ASML plans to launch Hyper-NA Extreme Ultraviolet (EUV) machines by 2030, signaling the advent of the Angstrom era for semiconductor processes below 1 nanometer. However, according to a report from The Chosun Daily, the high cost of this equipment may cause TSMC, Samsung, and Intel to hesitate.

Reportedly, it’s said that ASML introduced a higher numerical aperture (high-NA) EUV machine last year, which outperforms existing EUV technology. Now, ASML is rumored to release the Hyper-NA EUV for sub-1nm processes by 2030. This development brings up significant strategic considerations for TSMC, Samsung, and Intel due to the substantial expense involved in acquiring such advanced equipment.

According to the report, currently, each EUV machine costs approximately USD 181 million. The new generation high-NA EUV machines cost from USD 290 million to USD 362 million per unit, while the expected cost for Hyper-NA EUV could exceed USD 724 million, namely, about twice the price of the previous generation.

The same report further points out that TSMC plans to maximize the capabilities of its existing EUV equipment and utilize them through multi-patterning techniques. Simultaneously, the company is evaluating the scale at which additional equipment may be introduced.

A source cited in the report mentioned that though TSMC adopted EUV technology after Samsung, it has managed to mitigate the investment burden of adopting new equipment by upgrading existing tools and employing multi-patterning techniques effectively.

The same source also indicated that TSMC is particularly interested in multi-patterning techniques. By leveraging its extensive expertise and existing EUV infrastructure, TSMC has developed multi-patterning processes, aiming to delay the adoption of high-NA and Hyper-NA EUV as much as possible.

TSMC has openly expressed concerns about the high cost of the new generation high-NA EUV machines. TSMC’s Senior Vice President of Business Development and Co-Chief Operating Officer, Dr. Kevin Zhang, has indicated that the development of 1.6 nanometer processes may not necessarily require high-NA technology.

Zhang further mentioned that the decision to adopt the new ASML technology would depend on where it offers the most economic benefits and the technical balance they can achieve. He declined to disclose when TSMC might purchase High-NA EUV from ASML. 

As per the same report, Samsung is also considering the adoption of high-NA equipment but is adjusting its long-term roadmap with the emergence of Hyper-NA. According to another source cited by the report, it claimed that choosing high-NA now may not be the best option for long-term plans that involve processes below 1 nanometer.

The source continued that given the emergence of Hyper-NA, one approach might be to maximize the use of existing EUV and skip high-NA, transitioning directly to Hyper-NA. However, this is under the premise that Hyper-NA equipment has reached a certain level of reliability.

Intel was the first foundry to adopt high-NA EUV technology. Last year, its foundry business suffered a USD 7 billion loss, and in the first quarter of this year, it faced a record operational loss. One of the reasons for these financial challenges may be contributed to the cost burden of being an early adopter of the next-generation EUV equipment.

ASML has stated that high-NA EUV will enable Intel to produce chips with process nodes from 2 nanometers down to 14 angstroms (1.4 nanometers) and from 10 angstroms (1 nanometer) down to 7 angstroms (0.7 nanometers). ASML also mentioned that Hyper-NA will be essential for future angstrom-scale processes, as it can reduce the risks associated with multi-patterning processes, the report noted.

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(Photo credit: ASML)

TSMC’s capital expenditure is set to surge again in 2025 due to strong demand. According to a report from Economic Daily News citing sources, due to continued investment in the most advanced 2nm process and strong demand for 2nm technology, production capacity will be allocated to the Southern Taiwan Science Park. TSMC’s capital expenditure in 2025 is expected to reach between USD 32 billion to USD 36 billion, marking the second-highest in its history, with a year-over-year increase of 12.5% to 14.3%.

Reportedly, the market notes that ASML and Applied Materials will be the main beneficiaries of the increased capital expenditure by the leading manufacturer, and related suppliers are likely to benefit as well. TSMC has declined to comment on market rumors and reiterated that information regarding capital expenditure, and the progress of the 2nm process should be based on the content of the April earnings call next year.

TSMC emphasized at its April earnings call that its capital expenditure and capacity planning are based on long-term structural market demand. Capital expenditure for 2024 is expected to range between USD 28 billion and USD 32 billion. The 2nm process is scheduled to enter mass production as planned in 2025, with the production curve expected to be similar to that of 3nm.

In response to media questions at this year’s shareholder meeting, TSMC Chairman C.C. Wei stated that the previously announced USD 100 billion investment plan over three years was successfully achieved last year. He highlighted that AI presents a bright future for TSMC. He mentioned that capital expenditure and capacity planning are being carefully considered in line with market demand, and whether spending will exceed previous plans remains to be seen.

The sources cited by the same report have further reported that the demand from TSMC’s 2nm customer base has been unexpectedly strong. The related capacity expansion plans are also said to be directed towards the Southern Taiwan Science Park, facilitating process upgrades and creating space for new production.

In the 2nm client landscape, Apple remains a frontrunner, earmarking the technology for flagship smartphones. Intel has also expressed interest, with AMD, NVIDIA, and MediaTek expected to follow suit.

TSMC continues to push forward with its goal of 2nm mass production by 2025. The first fab in Baoshan for 2nm will have equipment installed by April 2024, and the second Baoshan fab will also maintain its schedule. The Kaohsiung fab is planned for 2nm expansion, with the earliest equipment installation expected by the third quarter of 2025. If the STSP also joins in production, mass production could continue to expand from late 2025 into 2026.

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(Photo credit: TSMC)

TSMC’s advanced 2-nanometer process capacity is set to begin mass production in 2025, with equipment manufacturers actively delivering machines. According to a report from Commercial Times, the EUV (Extreme Ultraviolet Lithography) machines, crucial for advanced processes, will see over 60 units delivered this year and next, with a total investment exceeding TWD 400 billion (roughly USD 12.3 billion).

As production capacity continues to expand, ASML’s delivery volume in 2025 is expected to grow by more than 30%, benefiting the Taiwanese supply chain. Among them, Gudeng Precision is actively collaborating with ASML on next-generation High-NA EUV development, while other Taiwanese fab tool makers, such as Marketech International and YEEDEX, are also expected to benefit.

As per the same report citing sources, it’s revealed that EUV machine supply is tight, with lead times of 16 to 20 months. Therefore, most orders placed in 2024 will be delivered starting the following year. According to the projections cited by the report, TSMC has ordered 30 EUV machines this year and 35 next year, though these numbers may be slightly adjusted due to capital expenditure plans.

In response to customer demand, ASML planned new capacity last year, with a clear growth trajectory for deliveries next year. Reportedly, the total delivery count for this year is estimated at 53 units, with next year’s count expected to exceed 72 units. Previously, according to a report from Reuters on June 5th, ASML already predicted that TSMC was expected to receive ASML’s latest High-NA EUV lithography equipment sometime this year.

The sources cited by Commercial Times further indicate that ASML’s capacity planning for 2025 remains unchanged, targeting 90 EUV units, 600 DUV units, and 20 High-NA EUV units. On November 14, ASML will hold its 2024 Investor Day, where it will present the latest five-year roadmap.

TSMC’s advanced process capacity is gradually ramping up. For the Tainan 3nm plant, mass production will begin in the third quarter, and EUV machines will be introduced progressively at the P8 plant next year. The Hsinchu Baoshan 2nm plant will see strong EUV equipment demand over the next three years, and the Kaohsiung 2nm plant is also advancing simultaneously.

The increasing number of EUV machines is simultaneously driving the growth in the usage of EUV mask boxes. Reportedly, it’s believed that Gudeng Precision will be among the most benefited companies. Gudeng continues to capture market share for FOUP (Front Opening Unified Pod) by maintaining a clean environment that removes plastic or contaminant particles and delivers ready-to-use products directly to customer sites. Additionally, Gudeng is also involved in collaborative development for ASML’s High-NA EUV.

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(Photo credit: ASML)

Previously, Huawei claimed its second-generation AI chip “Ascend 910B” could compete with NVIDIA’s A100 and was working to replace NVIDIA, which holds over 90% of the market share in China. However, Huawei is now facing significant obstacles in expanding its production capacity. According to a report from ChosunBiz, the chip is being manufactured by China’s leading semiconductor foundry, SMIC, and has been in mass production for over half a year, yet the yield rate remains around 20%. Frequent equipment failures have severely limited production capacity.

The report on June 27 states that despite being in mass production for over half a year, SMIC’s manufacturing of the Ascend 910B is still facing challenges, as four out of five chips still have defects. Meanwhile, due to increased U.S. export restrictions, the supply of equipment parts has been disrupted, causing production output to fall far short of targets.

SMIC initially projected an annual production of 500,000 units for the Ascend 910B, but due to continuous equipment failures, this goal has not been met. Currently, SMIC is unable to introduce new equipment and has to retrofit low-performance Deep Ultraviolet (DUV) equipment to replace advanced Extreme Ultraviolet (EUV) equipment for etching the 7nm circuits of the AI chips.

Dutch photolithography giant ASML stated that using EUV equipment for 7nm processes requires only nine steps, whereas using DUV equipment requires 34 steps. More steps lead to higher production costs, higher defect rates, and more frequent equipment failures. Additionally, the U.S. has further restricted global equipment manufacturers from providing maintenance services within China.

Industry sources cited by the same report reveal that SMIC lacks engineers for maintaining and managing chip manufacturing equipment, and global equipment suppliers are hesitant to provide services to China due to U.S. sanctions. SMIC is currently using equipment and parts purchased before the U.S. sanctions to maintain its 7nm production line.

According to a previous report by The Information, major tech companies such as Alibaba, Baidu, ByteDance, and Tencent have also been instructed to reduce their spending on foreign-made chips like NVIDIA’s. The Chinese government, which is aggressively promoting its own data center projects, is said to be boosting demand for Huawei’s AI chips as well.

Previously, the Wall Street Journal reported in January that Huawei received pre-orders for at least 5,000 Ascend 910B chips from Chinese tech giants last year, with delivery expected this year.

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(Photo credit: Huawei)