Substrate, a new American company, revealed on Tuesday (28th) that it has developed a wafer manufacturing tool that is capable of competing with the most advanced exposure equipment of Dutch semiconductor equipment leader ASML.
According to reports from Reuters and the Financial Times (FT), this equipment is the first step in Substrate’s ambitious plan to establish a U.S. wafer foundry business to compete with TSMC in manufacturing. Substrate CEO James Proud said in an interview with Reuters that he hopes to significantly reduce chip manufacturing costs by producing equipment at a lower cost than competitors.
U.S. President Trump has listed "bringing chip manufacturing back to the United States" as one of his policy priorities. The government has also recently invested in Intel, which was once the leader in the chip manufacturing industry but now lags behind TSMC in advanced process technology.
However, exposure technology requires extremely high precision, and ASML is the only company in the world that can manufacture extreme ultraviolet (EUV) lithography equipment. Substrate claims it has developed a version of the exposure that uses X-rays, a source involving a particle accelerator, with a wavelength even shorter than ASML’s latest EUV equipment, allowing it to print at a resolution comparable to ASML’s most advanced exposure machines, which cost more than $400 million each.
Jeff Koch, an analyst at the research institution SemiAnalysis, said that if Substrate succeeds in significantly reducing chip manufacturing costs, it may have a secondary effect, just like SpaceX strives to reduce rocket launch costs, thereby promoting more space exploration. "They firmly believe that the exposure part is the first problem that must be solved in completing their own process tasks. Ultimately, this will replace TSMC and ASML."
However, it will cost billions of dollars to develop an advanced chip process that can compete with TSMC's cost, which has always been a challenge for companies such as Intel and Samsung. Fabs today cost more than $15 billion to build and require specialized expertise to build and operate. Proud said the company has not received direct government funding, but U.S. officials have shown interest in Substrate's efforts. "I think the most important thing is that what we do has to be commercially viable on its own," Proud said.
At present, Substrate has attracted investors including Peter. Peter Thiel and other Silicon Valley investors have invested more than US$100 million. Current capital injection companies include Founders Fund, General Catalyst and Valor Equity Partners.
Substrate said it raised more than $100 million last year, valuing the company at more than $1 billion. He hopes to improve chip manufacturing capabilities in the United States because U.S. technology companies such as NVIDIA and Apple are overly dependent on overseas companies for advanced semiconductor production. Although neither he nor his brother have experience in semiconductor manufacturing, he believes this is an advantage because if they had experience, they might not think they could do it.
Proud claimed that his method can reduce the production cost of leading-edge process wafers from an estimated US$100,000 to "nearly US$10,000," with the goal of starting mass production by 2028. He said Substrate's goal is to produce chips at a "cost structure that allows the United States to compete with China."
Substrate is headquartered in San Francisco and was founded in 2022 by James Proud and his brother Oliver. Trae Stephens, partner at Founders Fund and leader of the Substrate investment case, believes that this is a very important moment in history and it must be done right. There's a lot of pressure on the government to find ways to ensure that the U.S. has a reliable and resilient semiconductor supply chain, and that's an opportunity Proud is seizing.
Silicon Valley chip start-up raises $100mn to take on TSMC and ASML US startup Substrate announces chipmaking tool that it says will rival ASML Further reading: Faraday Q3 earned 0.58 yuan per share and has received new 4nm AI ASIC cases SK Hynix M15X factory imports equipment two months ahead of schedule to accelerate HBM chip production expansion