Taiwan Chip Firm Halts Crucial Supplies to China Becoming One Of The First To Do So

Ramish Zafar
A laser hitting a tin drop inside ASML's TWINSCAN NXE:3400 to generate Extreme Ultraviolet (EUV) light inside the machine's light source. These machines are used to 'print' chips and cost more than $120 million a piece. Image: ASML

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After a patent application made by the Chinese technology giant Huawei Technologies Co., Ltd. related to advanced semiconductor manufacturing made the news earlier this month, a Taiwanese firm specializing in some chipmaking products has halted supplies to Mainland China. Huawei's patent had related to chip manufacturing via Extreme Ultraviolet (EUV) lithography, with the patent leading to speculation that China might be able to circumvent restrictions that prohibit it from acquiring or building chips with the new technology. Now, Taiwan's Gudeng Precision Industrial Co, which supplies equipment such as masks for EUV manufacturing, has stopped supplies to China, stating that this is not a suspension but instead a temporary delay.

Taiwan Mask Firm Stops Shipments To China But Still Accepting New Orders

The chip manufacturing process, which uses countless raw material inputs and products, involves printing tiny circuits on a silicon wafer. This process uses a light source, and a key benefit of EUV is its low wavelength which leads to easy printing of smaller circuits. In comparison, earlier technologies such as DUV had to rely on several patterning attempts to achieve the same circuit size as a EUV machine can with fewer patterning attempts.

At the heart of this process is a mask that contains the patterns on which these circuits are printed. These masks are placed below the light source and above the wafer, and once the light is beamed through them, they block the unrequired light and enable chip fabrication.

Gudeng Precision Industrial Co is one of the largest pod providers for these masks in the world and holds a dominant market share when it comes to EUV manufacturing. It is also one of TSMC's largest suppliers of this crucial equipment.

Gudeng Precision Industrial Co's EUV Pod. Image: Gudeng

Since one mask can be used for multiple wafers, it must be carefully stored and transported between the chip manufacturing machines. To ensure that the delicate equipment is not damaged during storage and transportation, the EUV masks are stored in the pods. Gudeng's equipment is also certified by ASML, the only company capable of making EUV machines.

Gudeng responded to media reports of its order halt, and outlined that it is only temporary in nature. The company also confirmed that it is continuing to take orders from China as well. This makes it one of the first semiconductor manufacturing consumable companies to stop supplies to China after the U.S. government stepped up its efforts to prevent China from gaining access to advanced technologies for military use.

The company is one of the top EUV pod manufacturers in the world, and apart from TSMC, it also supplies products to both Intel and Samsung. Earlier in the year, Gudeng was optimistic about TSMC's 3-nanometer mass production, through which it believes that it will experience growth for the next year and a half. Its EUV pods see higher demand as the transistor node size drops, with advanced processes such as 3-nanometer using up to eight times as many pods as the older 7-nanometer processes.

It has also benefited from China's aggressive pace of developing an indigenous chip manufacturing industry, and the primary products that it provides to the Mainland are the front-opening unified pods (FOUPs). These are different from the EUV pods, and they are used to store wafers. In fact, the pods transport the wafer inside the chip manufacturing machine to ensure that the outside environment does not contaminate the product. Gudeng expects its Chinese revenue to grow 40%, and the firm is believed to control a similar percentage of the market in the country as well.

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