However, regulators allow case-by-case flexibility when domestic alternatives are constrained, which is perhaps the main catch about the rule. The requirement is applied most strictly to production lines used to make chips via mature process technologies, whereas advanced nodes receive temporary exemptions due to gaps in local tool availability, particularly when it comes to lithography equipment.
Speaking of lithography tools, state-linked chipmakers placed 421 orders for domestically produced lithography machines and their components this year at combined value of about ¥850 million ($121.3 million), according to Reuters . While the number 421 looks substantial, it includes both new systems and spare parts, which does not give an idea how many new tools were actually ordered.
To put the value into context, ASML's dry ArF tools used to produce chips on mature nodes cost around $27.9 million per unit on average (based on the company's Q4 FY2024 results ), whereas KrF systems cost around $14.46 million per unit. By contrast, ASML's latest immersion DUV (ArF) lithography scanners used to make chips on advances process technologies cost $82.5 million per unit on average. With Chinese-made litho tools we do not usually talk about immersion lithography, but rather about dry ArF or KrF machines (China's best demonstrated tools are 28nm-capable, but these do not seem to be in mass production now). That said, the combined value shows that the Chinese industry can only produce rather cheap litho systems for outdated process technologies and even they are hardly made in significant quantities.
$121.3 million is approximately eight ASML KrF litho machines. Even if Chinese manufacturers have managed to cut costs of these mature tools by half (which is probably impossible), it means that they could only produce 16 of such tools in 2025. By contrast, ASML built 152 KrF steppers, 65 i-line tools, 28 ArF dry scanners, 129 ArF scanners, and 44 EUV scanners in 2024.
Get Tom's Hardware's best news and in-depth reviews, straight to your inbox.
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/semiconductors/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/semiconductors/china-tells-chipmakers-to-use-homegrown-chipmaking-tools-for-50-percent-of-new-capacity-decree-designed-to-squeeze-foreign-suppliers-out-of-supply-chain#main
- https://www.tomshardware.com
- [Daily Due Diligence] NVDA NVDA
- Musk to expand xAI's training capacity to a monstrous 2 gigawatts with third building at Memphis site — announcement comes days after Musk vows to have 'more AI
- SK hynix to build first U.S. packaging plant for HBM — plugs critical hole in U.S. supply chain, $3.9B investment challenges TSMC and reshapes AI supply chains
- Chinese memory maker CXMT prepares $4.2 billion USD IPO to take advantage of tight memory market — company lays out path to profitability as DRAM demand skyrock
- TikTok owner ByteDance to reportedly purchase $14 billion worth of Nvidia AI GPUs in 2026 — Company betting on Beijing's approval following Trump admin's ease o
Informational only. No financial advice. Do your own research.