US-China tech war: SMIC secures supply of chip-making equipment from ASML as signs suggest easing of sanctions
- ASML’s extreme ultraviolet (EUV) lithography systems, required for producing leading edge 5- and 7-nm node chips, were not included in the purchase agreement
- SMIC plans to spend US$4.3 billion in capital expenditure this year, with most of the investment supporting expansion of processing capacity for mature nodes
Semiconductor Manufacturing International Corporation (SMIC) has secured supply of deep ultraviolet (DUV) lithography systems from Dutch firm ASML in an amended purchase agreement worth US$1.2 billion, a move that could help ease supply chain risks for China’s chip-making champion that has been under the shadow of US sanctions.
Hong Kong-listed SMIC said in a stock filing late Wednesday that it renewed in February an existing volume purchase agreement with ASML, one of its top three foreign suppliers. The updated agreement, covering shipments of ASML’s DUV systems to SMIC, will be valid through December 31 this year, paving the way for the Chinese foundry to move forward with capacity expansion plans for its mature technology nodes.
ASML’s extreme ultraviolet (EUV) lithography systems, required for producing leading edge 5- and 7-nm node chips, were not included in the purchase agreement, according to two people familiar with the matter, who declined to be named.
The Dutch company is still waiting for a licence from the Netherlands government to export EUV systems to China, according to a spokeswoman at ASML China.
The latest announcement comes two days after Chinese analysts cited unconfirmed reports that the US will soon ease restrictions on export licence requirements for some of SMIC’s US suppliers. Washington slapped trade sanctions on SMIC last year for its alleged ties to the Chinese military, a charge the company has repeatedly denied.
The Trump administration tried to block ASML’s exports of crucial chip-making technologies to SMIC, according to a Reuters’s report, citing sources. Under rules that have not been repealed by the Biden administration, the US Commerce Department has required SMIC’s US suppliers to apply for a licence before shipment of equipment and materials to the Shanghai-based wafer fab over national security concerns.
