A sales clerk shows off Elpida Memory Inc. memory chips at an electronics shop in Tokyo, Japan, on Thursday, March 5, 2009.Tomohiro Ohsumi | Bloomberg | Getty ImagesShares in Japan's chip-related companies extended declines for a second day as Chinese startup DeepSeek's AI competitiveness calls into question the United States' leadership in the field.Semiconductor testing equipment supplier Advantest slid over 10%, Tokyo Electron fell 3.6%, while Renesas Electronics traded 2.29% lower Tuesday.Softbank Group, which owns chip designer Arm, slid 5.26%. Data center-related shares also continued to take a hit, with wire and cable firms Furukawa and Fujikura dropping 8.22% and 8.1%, respectively.DeepSeek released a free, open-source large language model in late December, claiming it was created in only two months with a budget of under $6 million. Last week, the lab introduced R1, a reasoning model that outperformed OpenAI's latest o1 in several third-party tests."There will be a lot more pain to follow today as we follow the U.S. down," said Andrew Jackson, head of equity strategy at ORTUS Advisors. "The big questions is whether the U.S. will U-turn on their approach and deregulate chip and SPE restrictions seeing as they are (currently) ineffectual or try and ramp things up even more," Jackson wrote in an email

Lithography, The Core Of Semiconductor ManufacturingProducing semiconductors has become one of the most profitable and strategic industrial activities in the 21st century, with companies like Nvidia (NVDA -3.7%), Intel (INTC -3.37%), or TSMC (TSM -0.96%) (follow the links for a dedicated report on each of these companies) reaching market capitalization in billions if not several trillions of dollars.Almost all of them use a process called photolithography. As the name indicates, it uses very powerful light beams to engrave silicon wafers and turn them into computer chips and other semiconductor components.This requires very specialized machines with plenty of ultra-precise lenses, motors, and a system called a “photomask”.Photomasks are made of quartz or glass substrates coated with an opaque film onto which the pattern of the device being manufactured is etched. This film is essentially the template for the chips that will be engraved on the silicon wafer, although it is miniaturized to a much smaller scale during the engraving process.Most chips are manufactured using DUV (Deep Ultra-Violet) lithography machines, which use powerful UV beams to etch the silicon. More advanced chips use EUV (Extreme Ultra-Violet), which uses even more powerful UV light. For now, semiconductor manufacturer ASML (ASML +0.09%) has a monopoly on EUV.Both DUV and EUV machines are big, expensive, and power-hungry.Another option is emerging with maskless lithography. This technology might have made a giant jump forward thanks to the world's first deep-UV microLED display chips invented by Chinese researchers.Working at the Hong Kong University of Science and Technology and the Southern University of Science and Technology at Shenzhen, they published their results in Nature Photonics under the title “ High-power AlGaN deep-ultraviolet micro-light-emitting diode displays for maskless photolithography ”.Maskless LithographyThe main point of using photomasks for lithography is that it allows the DUV machine to use a lot of light, and then focus part of it into the engraving process

International semiconductor firms, including ASML, Advanced Micro Devices (AMD) and Qualcomm, are showcasing some of their latest products at the 7th China International Import Expo (CIIE) in Shanghai this week, the South China Morning Post (SCMP) reported on Thursday.