Controversial Chip in Huawei Phone Produced on ASML Machine

Bloomberg: China’s Semiconductor Manufacturing International Corp. (SMIC) used equipment from Europe’s ASML Holding NV to create an advanced processor for a Huawei smartphone, raising alarms in the U.S. Despite existing export restrictions aimed at preventing China from accessing advanced semiconductor technology, the Huawei Mate 60 Pro smartphone was released with a cutting-edge 7-nanometer chip made by SMIC. The development calls into question the effectiveness of the U.S.-led export controls.

ASML, which has a monopoly on certain lithography systems essential for cutting-edge chip production, saw its shares drop after the report. Although ASML faces export restrictions, less advanced models of its equipment can still be retooled to produce advanced chips, albeit at higher costs. However, China’s government is willing to shoulder these costs.

New regulations from the Biden administration further limit the exports of such machines. ASML expects these regulations to affect up to 15% of its sales in China. Dutch politicians and ASML’s CEO have raised concerns over these unilateral measures, warning that it could push China to develop its own competing technology.

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