By Tom Fowdy
As reported by Reuters, "China has begun mass producing domestically developed immersion deep-ultraviolet (DUV) lithography machines, a technology crucial to advanced chipmaking." The news sank shares of the Dutch Chipmaking machine manufacturer ASML, widely regarded as the world leader in the industry, of which considerable geopolitical effort has been exerted to try and deny Beijing access to their technologies. While China has not yet been able to mass-produce ASML's most advanced product, the Extreme-ultraviolet Lithography machine (EUV), the ability to mass-produce DUV machines represents an unquestionable breakout in its chipmaking ambitions.
Starting in 2019-2020, the United States has set out a policy to try and contain the rise of China's technological capabilities by blocking its ability to advance in semiconductor manufacturing. With China moving up the technological ladder, access to more advanced chips has subsequently become a critical resource for furthering its own economic development and military competitiveness, allowing the country to advance into making higher-quality electronics of its own independent of foreign supply chains.
The United States has deemed China's chipmaking advances as a multi-domain threat to its own hegemony, and thus has placed containment of Beijing in chipmaking as its foremost agenda in what US National Security Advisor Jake Sullivan described as a "small yard, high fence." In doing so, successive administrations have placed growing export rules on China, first in terms of chips themselves, and then targeting its entire chipmaking industry in terms of manufacturing equipment. This is not just at home, rather, the US has also weaponised its own patents and hold over the supply chain to block 3rdparty suppliers, such as ASML, from doing business with Beijing. For example, "If we make X part for Y Machine, you cannot export Y to China as it violates our export controls."
As a result, China has for many years now been forced into a race of self-sufficiency in order to secure its own semiconductor supply chain to break out of American attempts to contain it. This, of course, is no easy task, given how vast the supply chain is and the numerous sophisticated components involved, and thus, it is no surprise that many commentators in the past subsequently wrote off Beijing's chances. However, these predictions have aged poorly. China has treated semiconductor technology as an existential, top-tier national security issue, a Manhattan project if you will, and has invested billions into a comprehensive effort that has ranged from building infrastructure to reverse engineering products and innovating new ones.
For example, as Reuters reported, China has already reverse-engineered an entire ASML EUV machine, even if it is not ready for manufacturing processes. How did they do it? They hired former engineers from the firm and mapped out every single component required, before acquiring each one and then reassembling it. Thus, it is no surprise that they have already begun the mass production of DUV machines. These machines, while not the most advanced, will allow Chinese firms to produce 20-7nm mode chips of their own accord, independent of relying on bottlenecked imported products.
And what will happen next? Every time China reaches a technological breakthrough, it subsequently accelerates manufacturing of that product to a global scale, floods the market and thus pushes out competitors, this has been seen most strikingly with electric cars, amongst other things. As Sanne van der Lugt, a Dutch researcher, told Reuters, "What this shows is that U.S. export controls successfully created a business case for Chinese lithography," she said. "It was not what they were intended to do, but that is the outcome."
After all, ASML has traditionally been a monopoly manufacturer, with nobody else able to rival its products, but who else would be better positioned to do so than China? This raises broader strategic questions when Beijing subsequently starts exporting this equipment to countries who are excluded from the Western technology monopoly, such as Russia, Iran, etc. This leaves no good options for the US, other than to do what it otherwise should be doing; rather than keeping China down, it should focus on staying ahead.
Washington has miscalculated that contemporary China is just another Soviet Union, assuming that it is a rigid state, unable to innovate, and thus if subject to technological containment it will eventually stagnate. This is an ideological assumption, one which relies too much on the cliché that "China cannot innovate" and relies on an outdated, Cold War view of the world. However, we live in a global economy, and the US won't win by assembling barriers alone. I said that six years ago, I say it again today.
The views do not necessarily reflect those of DotDotNews.
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