Chipmakers Sacrifice Yield to Bypass EUV Lithography Ban

Morgan Stanley estimates that CXMT, a Chinese DRAM manufacturer, produces only about one-third as many bits per wafer as its Western competitors. This efficiency gap stems from China’s inability to access extreme ultraviolet, or EUV, lithography machines. ASML is the sole producer of these tools, which use 13.5-nanometer wavelength light to print fine features on modern processors. Export controls have kept these machines out of China, forcing local firms to rely on older deep ultraviolet, or DUV, equipment.

The workaround involves multiple patterning, where manufacturers split a complex design into several simpler patterns and build layers step by step. Chris Mack, co-founder and CTO of Fractilia, notes that industry wisdom suggests three exposures on a 193 immersion tool cost roughly the same as one EUV pass. However, at four masks, EUV becomes the cheaper option. Each additional exposure increases the risk of defects and extends production times. Designers must add space around features to compensate for alignment errors, which enlarges the chip and reduces the number of dies per wafer. Since wafers cost tens of thousands of dollars, this reduction in usable output is expensive. "You don't sell wafers, you sell die," Mack said.

China has progressed further than expected despite these constraints. A 2023 teardown of the Huawei Mate 60 Pro revealed its Kirin 9000S processor was made by SMIC using a second-generation 7-nanometer process without EUV. Recent analysis of the Kirin 9030 indicates SMIC has moved its DUV-based process closer to 5-nanometer density, though it still trails TSMC and Samsung. Mack cautions that node labels like 5-nanometer have little meaning without context, and SMIC's N+3 process remains less scaled than established rivals.

DUV technology still has potential. Micron developed its 1-alpha DRAM without EUV, using tight process control. Mack stated that Micron "pushed 193 farther than any of the other memory makers did." Morgan Stanley considers CXMT's planned move to 1-alpha DRAM for HBM3e achievable without EUV. Douglas Fuller, a researcher at Copenhagen Business School, expects advanced packaging to allow DUV use for latest DRAM generations by the end of the decade. Mack added that memory is much easier to manufacture than logic chips if the full 193 immersion ecosystem is available.

Micron eventually adopted EUV for its 1-gamma DRAM, which offers more than 30 percent greater bit density than the previous generation. EUV has its own drawbacks, including stochastic effects that require higher exposure doses. Mack said he would be "hard pressed" to believe a 3-nanometer or 2-nanometer node could be economically viable without EUV.

Chinese chipmakers will continue pushing DUV while accepting larger dies, poorer yields, or longer manufacturing times. Morgan Stanley assumes CXMT will lift its share of global DRAM bit supply from 14 percent in 2026 to 16 percent in 2028 through new capacity. The bank also expects China's AI chip self-sufficiency to rise from 42 percent in 2025 to 70 percent by 2030, though gaps in EUV, HBM, and advanced software will persist.