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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• [News] US to Lobby Netherlands and Japan to Contain China’s Chip Development, Focusing on HBM
• [News] Strengthening Controls on Semiconductor Equipment Exports to China, Japan Reportedly Tightens Export Control Measures Further

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China aims to establish at least 50 AI standards by 2026, as outlined in a new draft policy from Beijing, according to a report by South China Morning Post. The draft policy, released on Tuesday by the Ministry of Industry and Information Technology (MIIT), will not only cover training for large language models (LLMs), but even semiconductors.

This initiative is part of China’s effort to catch up with the U.S. in AI development, the report noted. Earlier in April, Alibaba’s chairman, Joe Tsai, mentioned in an interview that China is at least two years behind its leading US counterparts, like OpenAI and Google, in the global AI race.

China’s proposed standards will cover training for large language models (LLMs), which are the foundation of generative AI services like ChatGPT. Additionally, they will address safety, governance, industrial applications, software, computing systems, data centers, and the technical requirements and testing methodologies for semiconductors.

According to MIIT, these standards are expected to apply to at least 1,000 Chinese technology companies. The document also states that China will participate in creating at least 20 international AI standards, the report said.

MIIT’s draft policy identifies 12 critical technologies in the AI supply chain, including LLMs, natural language processing, computer vision, and machine learning, which involves systems performing complex tasks akin to human problem-solving. The draft policy also identifies four layers that comprise China’s AI industry chain: the foundation (including the computing power, algorithms, and data needed to train LLMs), the framework, the model, and applications.

Citing an industrial expert, the report indicated that the latest draft policy, unlike the usual command-and-control regulations, has adopted a pro-market, soft-law approach to guide and promote China’s AI industry. This stance, which is comparatively innovation-oriented and market-friendly, will not only enable the establishment and development of an AI ecosystem, but benefit other industries as well.

China’s tech giants, led by Huawei, has been aggressively advancing in the AI arena. 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, according to ChosunBiz, the chip, being manufactured by China’s leading semiconductor foundry, SMIC, has been in mass production for over half a year, yet the yield rate remains around 20%.

On the other hand, in response to US export bans, NVIDIA has commenced to sell H20, its AI chip tailored for the Chinese market earlier this year.

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• [News] Huawei Faces Production Challenges with 20% Yield Rate for AI Chip
• [News] NVIDIA Reportedly Facing Price Cut Pressure of H20 Chip in China Amid Competition with Huawei

According to a report from the Korean media outlet The Chosun Daily, Chinese company Huawei plans to collaborate with memory manufacturer Wuhan Xinxin Semiconductor Manufacturing Co. (XMC) to produce High Bandwidth Memory (HBM) semiconductors. Additionally, Jiangsu Changjiang Electronics Technology (JCET) and Tongfu Microelectronics, which are developing CoWoS advanced packaging technology, are also participating in the project.

CoWoS is a high-precision technology that integrates graphics processing units (GPUs) and HBM on a single substrate. This enhances computational performance, saves space, and reduces power consumption. Currently, the CoWoS technology developed by leading foundry TSMC is used in the production of AI chips for GPU giant NVIDIA.

In May 2023, according to another report from Reuters, China’s leading DRAM company CXMT (ChangXin Memory Technologies) collaborated with Tongfu Microelectronics to develop HBM chip samples. Additionally, tech media outlet The Information reported earlier that a series of Chinese companies, led by Huawei, plan to mass-produce HBM and increase China’s HBM output by 2026.

Furthermore, in March 2023, XMC announced the construction of an advanced HBM manufacturing plant, which is expected to produce 3,000 12-inch wafers per month.

The report further emphasizes that China is still in the early stages of HBM development. However, under the technological restrictions imposed by the United States in the semiconductor and artificial intelligence sectors, Huawei and a series of Chinese semiconductor companies’ move into HBM production has attracted close attention.

Currently, South Korean companies SK Hynix and Samsung Electronics control most of the global HBM market share, indicating that Huawei’s plan to develop HBM still has a long way to go.

Per TrendForce’s data, the three major HBM manufacturers held market shares are as follows: In 2023, SK Hynix and Samsung each held around 47.5%, while Micron’s share was roughly 5%. Still, forecasts indicate that SK Hynix’s market share in 2024 will increase to 52.5%, while Samsung’s will decrease to 42.4%.

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• [News] Micron’s HBM Expansion at Full Throttle: Rumored to Expand in US, Malaysia Also an Option
• [News] XMC Initiates IPO Plan, Potentially Becoming China’s First HBM Foundry

(Photo credit: XMC)

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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• [News] NVIDIA Reportedly Facing Price Cut Pressure of H20 Chip in China Amid Competition with Huawei
• [News] Huawei’s HarmonyOS Project Ready to Hit the Road with Increasing Participation from Chinese Enterprises

(Photo credit: Huawei)

According to a report from the Economic Daily News, amid the escalating US-China tech war, Chinese President Xi Jinping emphasized the need to enhance the sense of urgency and intensify efforts in technological innovation. Particularly in six key areas, including semiconductors, industrial machinery, and advanced materials, China aims to ensure the independence, security, and control of crucial industrial and supply chains, striving to become a technological powerhouse by 2035.

During the speech Xi delivered while presenting China’s top sci-tech award on June 24th, he stated that building China into a technological powerhouse has been a persistent goal of the Chinese nation since modern times. As per the same report, by 2035, China aims to possess world-leading technological strength and innovation capability, which will support a significant leap in economic strength, national defense strength, and comprehensive national power.

Xi also called for China to focus on six key areas, including addressing bottlenecks in integrated circuits (semiconductors), industrial machinery, basic software, advanced materials, and scientific research instruments by intensifying technological research and development efforts. The goal is to ensure that critical industrial and supply chains are self-sufficient, secure, and controllable, providing technological support for these areas.

Furthermore, he urged targeting the strategic high ground of future technological and industrial development, accelerating innovation in next-generation information technology, artificial intelligence (AI), quantum technology, biotechnology, new energy, and new materials. The aim is to foster the growth of emerging and future industries.

Regarding the current international situation, Xi mentioned that the technological revolution and major power rivalries are intertwined, making high-tech fields the forefront and main battleground of international competition. He also acknowledged that China’s capability for original innovation remains relatively weak, with some critical core technologies dependent on others and a shortage of top scientific talent.

Earlier this month, Huawei also reportedly acknowledged that China’s semiconductor development may have plateaued. Per a report from Business Korea, Zhang Ping’an, the Chief Executive Officer of Huawei Cloud Services, noted that manufacturing 3.5 nm semiconductors necessitates EUV lithography machines, which Huawei is reportedly working on independently. However, overcoming U.S. and Dutch patents to internalize this technology is considered highly challenging.

Read more

• [News] US to Lobby Netherlands and Japan to Contain China’s Chip Development, Focusing on HBM
• [News] Huawei Reportedly Acknowledges China’s Semiconductor Development May Have Plateaued, Facing Challenges Below 3.5nm

(Photo credit: iStock)