China Bypasses Sanctions: Upgrades Old Machines for Advanced AI Chips

• China's semiconductor industry upgrades older ASML deep ultraviolet (DUV) lithography machines to produce advanced AI and smartphone chips, circumventing Western export controls.
• Chinese fabs are retrofitting existing equipment with upgraded components like wafer stages and optical sensors sourced from secondary markets.
• This workaround enables production of 7-nanometre chips, crucial for modern AI workloads, despite restrictions on advanced ASML tools.
• SMIC and Huawei are reportedly using these upgraded older machines, demonstrating continued progress in chip manufacturing.
• The strategy highlights challenges for US-led export controls, as China adapts existing technology to narrow the semiconductor gap.

Why It Matters: China upgrades older ASML machines to produce advanced AI chips, bypassing Western sanctions.