China Plans Its Own ASML: Semiconductor Industry to Become More Independent

Key Takeaways

• Industry described as fragmented, weak despite subsidies
• Goal to stabilize 28nm, launch 14nm, test 7nm by 2030
• Lacks EUV lithography; depends on ASML for advanced nodes
• Proposes consolidation, shared platforms, incentive reforms

Summary

Leading Chinese chip executives issued a stark assessment of their domestic semiconductor sector, calling it small, fragmented, and weak despite years of state subsidies. Their analysis, timed with the 2026‑2030 five‑year plan, sets targets to stabilize 28 nm production, achieve reliable 14 nm lines, and launch experimental 7 nm fab capacity by 2030. The report highlights a critical gap in lithography, where China still relies on outdated ASML equipment and lacks a home‑grown EUV scanner. To close the gap, officials propose industry consolidation and a coordinated innovation chain across research, equipment, and manufacturing.

Pulse Analysis

China’s semiconductor ecosystem has long been characterized by a patchwork of small players, each pursuing parallel development tracks. The recent candid analysis by senior figures from SMIC, YMTC, Naura and Empyrean underscores how this fragmentation hampers economies of scale and slows technology transfer, even as the government pours billions into subsidies and research grants. By framing the issue within the upcoming 2026‑2030 five‑year plan, the authors signal a strategic pivot from piecemeal funding to structural reform.

At the heart of the lag is lithography, the process that defines transistor dimensions. While Chinese firms can produce 28 nm chips using domestically built scanners from SMEE, the leap to 14 nm and especially 7 nm hinges on extreme ultraviolet (EUV) technology—a domain dominated by Dutch firm ASML. Export controls have limited China to legacy DUV tools, inflating costs and reducing yields. An experimental EUV prototype exists, but it incorporates ASML components, highlighting the immense integration challenge of assembling over 100,000 parts from a global supplier network.

In response, the report calls for sweeping industry consolidation, a shared manufacturing platform, and new incentive mechanisms to accelerate risk‑taking. By aligning research institutions, equipment makers, and fab operators, China hopes to create a unified innovation pipeline that can eventually produce a home‑grown EUV system. Success would not only bolster national security but also introduce a new competitor into the global chip‑making market, potentially reshaping supply chains and pricing dynamics for advanced semiconductors.