China makes progress in 3-nm chips without advanced lithography tools

China's sub-3-nm DUV breakthrough is not about mass production. It confirms the country's commitment to an alternative chipmaking path. The Chinese Academy of Sciences (CAS) has shown a preliminary gate-all-around (GAA) device development path. This uses less advanced deep ultraviolet (DUV) lithography, circumventing US sanctions on ASML's EUV tools. The focus is on fundamental research, not immediate commercialization.

This development raises the stakes for Taiwan's chip foundries, particularly TSMC. While TSMC leads with advanced EUV, China's progress in DUV for sub-3-nm nodes could eventually reduce reliance on Taiwanese fabs for certain advanced chips. The test for TSMC is whether its technology lead can maintain market share as China develops its own capabilities. This pushes the timeline for competitive Chinese advanced manufacturing closer.

The thing to watch is the speed of China's transition from lab breakthroughs to pilot lines and then to volume production. This will determine the real impact on global supply chains. If China achieves even limited sub-3-nm DUV production by 2030, it will significantly alter the semiconductor landscape. This would challenge the current dominance of EUV-dependent manufacturers.