Canon’s announcement of nanoimprint lithography (NIL) technology, which can be used to produce 5nm chips, poses a potential challenge to ASML’s EUV technology. While EUV machines are currently used for manufacturing 3nm chips, Canon claims that NIL could eventually help create 2nm chips with improvements to mask technology. However, experts remain skeptical about Canon’s major technical breakthrough, as NIL has faced issues with defects and other problems in the past.

The U.S. faces a dilemma as ASML does not ship its EUV machines to China due to sanctions. But since NIL doesn’t require cutting-edge optics or mirrors like EUV does, Canon might be able to ship the technology to China. This could give Chinese foundries, such as SMIC, the ability to produce 5nm, 3nm, and eventually 2nm chips. Considering the U.S.’s reaction to Huawei’s Mate 60 Pro powered by a 7nm Kirin 9000s chip, which supports 5G, it is expected that the U.S. will move to block the sale of NIL technology to China.

However, Gartner analyst Gaurav Gupta believes that commercial impact from NIL technology is not expected for at least five years and will initially focus on memory chips. He points out a significant gap between research and development capabilities at leading-edge nodes and high-volume execution, which poses a challenge for NIL’s commercial viability.