Chinese semiconductor industry

ZeEa5KPul said:

Even if the impact is non-zero, it's still tiny. The US already has a blanket ban on the most advanced technology (EUV) and stuff lower down China already has or is on the cusp of developing.

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It could go beyond the most advanced technology and lithography machine. It can include equipment from Applied Materials, KLA Corp, Lam Research etc.. Together these US companies constitute very large market shares of the semiconductor equipment. They also have very large installed based in China. Chinese companies can not replace them all in the short or even medium terms.

In the case of SMIC sanction, they restrict the level of technology, for example, 10nm and below. SMIC could continue with lower level technology. The worst case scenario would be Fujian JinHua, when they had to stop all fab construction immediately with the equipment manufacturers stopping their deliveries and services right away after the sanction was announced.

So I would breakdown the severity of the sanction into three categories in terms of impact: 1) do they affect all future equipment sales? 2) do they affect future equipment sales of advanced technologies? 3) do they affect the current installed base and/or existing fab projects?

weig2000 said:

It could go beyond the most advanced technology and lithography machine. It can include equipment from Applied Materials, KLA Corp, Lam Research etc.. Together these US companies constitute very large market shares of the semiconductor equipment. They also have very large installed based in China. Chinese companies can not replace them all in the short or even medium terms.

In the case of SMIC sanction, they restrict the level of technology, for example, 10nm and below. SMIC could continue with lower level technology. The worst case scenario would be Fujian JinHua, when they had to stop all fab construction immediately with the equipment manufacturers stopping their deliveries and services right away after the sanction was announced.

So I would breakdown the severity of the sanction into three categories in terms of impact: 1) do they affect all future equipment sales? 2) do they affect future equipment sales of advanced technologies? 3) do they affect the current installed base and/or existing fab projects?

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There are already shortages of chips due to the ban. If the US tried to further restrict chip equipment sales to China, then the US needs to expect more inflation from home appliance to cars. It is just not doable.

Just like the US allows export of 4G chips to Huawei, the US government still needs to give the US chip equipment companies some leeway especially chip equipment companies from the EU, Japan and even SK could provide many low to medium ends of products that could erode the US companies competitiveness.

Whatever new restrictions that the US intended to impose would strictly aim at advanced chip equipment. Low to medium end of chip equipment would still allow to export. Already installed equipment would still be provided with service. US has already banned export of advanced chip equipment to new fab projects so most new fab projects are 14nm or above.

In the end of the day, the US has already crippled China's attempt to advance its advanced chip sector by restricting EUV and other advanced chip equipment. If China couldn't develop its own chip equipment, then a few years down the road China semiconductor sector would not be competitive.

KYli said:

Whatever new restrictions that the US intended to impose would strictly aim at advanced chip equipment. Low to medium end of chip equipment would still allow to export. Already installed equipment would still be provided with service. US has already banned export of advanced chip equipment to new fab projects so most new fab projects are 14nm or above.

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That will depends of the definition of "low and medium" lot of equipment used in older manufacturing process is also used in the in more advance nodes and that is the problem, they want to change the definition from "unique" to "capable of" that will put a large swap of the big three equipment (KLA,LAM, AM) in the control list.

KYli said:

In the end of the day, the US has already crippled China's attempt to advance its advanced chip sector by restricting EUV and other advanced chip equipment. If China couldn't develop its own chip equipment, then a few years down the road China semiconductor sector would not be competitive.

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EUV is such a new technology that is a long learning curve and EUV is a just one step of many to make easy the manufacturing process of newer nodes but is not magic bullet, comes with a steep price tag and the others process (etching, depositions, implantation, doping and so on) are just as hard or even harder than before as Samsung, others had find out and eventually Intel will find out.
China will eventually will have their own patterning tools, EUV, immersion, dry, mask-less and nanoimprint, in the meanwhile SMIC and others could cut time in R&D by using what they had develop for the time being in EUV, that will allows them to develop photoresist, learn to develop EUV masks and so on. until they develop their tools.
If the U.S. decide to go this way it could hurt in the short term but in the long run it could hurt the U.S. more.

- It will increase the market share of China own tools manufacturers like AMEC, Naura, Kingsemi, Kingstone, ACM, SMEE. Even small companies that nobody knew that existed like ASEL or Dongfang will find themselves with a market of the size of China for their own with less competition, like the mammals when the dinosaurs died. With more market share, more money for R&D.
- If the U.S. can't reach an agreement with their allies on tools and decide to go unilateral then they could lose market share to Japanese, European and other non U.S. companies, I think will be difficult for the U.S. to reach an broad agreement on export controls outside the Wassenaar agreement.
-It could incentivize the offshoring of R&D and manufacturing as U.S. own tool manufacturers scramble to avoid export controls that could hurt their revenue. With time the US could lose the ability of making this tools.

So they should be careful because is very well documented that stringent exports controls have backfire on the US industry in the past.

Equipment: Profit Inflection Point (63%)


The industry growth rate is 63%, and it continues to verify the high prosperity of

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In 22Q1, the major domestic semiconductor equipment manufacturers achieved a total revenue of nearly 5 billion yuan, and the industry revenue increased by 63% year-on-year. Compared with the unanimous expectation of 51% for the whole year, the growth exceeded expectations and further verified the semiconductors under the rapid expansion of the fab. The equipment industry is booming.

North China Creation (Naura): 22Q1 revenue was 2.1 billion yuan, a year-on-year increase of 51%; of which, the revenue from January to February was 1.366 billion yuan, a year-on-year increase of 135%, contributing to the main growth in the first quarter. At the same time, the company disclosed order data for the first time. From January to February, the company's new orders exceeded 3 billion yuan, an increase of more than 60% year-on-year. For the whole year, the first quarter is usually a low season for the industry. Most orders will be confirmed in the second half of the year, which will drive the high growth rate of revenue in the second half of the year. In addition, combined with the order growth rate disclosed by the company, we expect that the company will continue to achieve higher-than-expected growth in the subsequent quarters. .

China Micro Corporation (AMEC): 22Q1 revenue was 940 million yuan, a year-on-year increase of 57%; of which etching equipment revenue was 714 million yuan, a doubled growth; MOCVD equipment revenue was 42 million yuan, a year-on-year decrease of 68.59% , mainly because the company's newly signed Mini LED MOCVD scale orders have not yet confirmed revenue. Looking forward to the following quarters, we believe that the company's etching equipment will continue to maintain a high growth rate; newly signed orders for ultra-180-cavity Mini LED MOCVD will also continue to contribute to revenue with further product delivery.

Shengmei Shanghai (ACM): 22Q1 revenue of 350 million yuan, a year-on-year increase of 29%, slightly lower than expected, mainly due to the slowdown in the company's delivery of equipment acceptance and confirmation due to factors such as the epidemic; , the delayed part of the revenue will contribute to subsequent quarterly growth, and the company's equipment delivery confirmation will also quickly return to normal.

Huafeng Measurement and Control: 22Q1 revenue was 260 million yuan, a year-on-year increase of 123%. In the follow-up, with the continuous increase of 8300 series products, the company's product structure will be further improved, while contributing to the further expansion of the company's revenue scale.

Changchuan Technology: 22Q1 revenue was 540 million yuan, an increase of 83% year-on-year, and also achieved a growth that exceeded expectations; follow-up high-end SOC testing machines will continue to contribute incremental revenue to the company.

Tuojing Technology (Piotech): 22Q1 revenue of 100 million yuan, an increase of 82% year-on-year; as the only domestic manufacturer that has realized the industrial application of PECVD and SACVD equipment, the company has a very strong and irreplaceable role in the localization of wafer fab thin film deposition equipment. In the future, it will also achieve rapid growth with downstream expansion.

Wanye Enterprise (The owners of Kingstone Semi): 22Q1 revenue was 90 million yuan, down 77% year-on-year, mainly because the company's real estate business accounted for a relatively large proportion, and the real estate part was not delivered in the first quarter. In the semiconductor equipment part, the company's Keshitong ion implanter achieved a 0-1 breakthrough last year, with a revenue of nearly 120 million yuan; from the beginning of the year, the company's new orders for the semiconductor equipment part have exceeded 680 million yuan, which will be Continue to provide guarantee for the company's subsequent

Zhichun Technology (PNCS): 22Q1 revenue was 540 million yuan, a year-on-year increase of 136%. In 2021, the company's new orders for semiconductor equipment will be 1.12 billion yuan. The company expects that the order target for wet process equipment will exceed 2 billion yuan in 2022, nearly doubling the growth to verify the company's confidence and strength.

Core Source Micro (KingSemi): 22Q1 revenue was 180 million yuan, a year-on-year increase of 62%. As of the end of 21Q3, the company announced nearly 1.3 billion orders in hand. With the gradual delivery of orders, it will continue to escort the company's rapid growth in 2022.

weig2000 said:

It could go beyond the most advanced technology and lithography machine. It can include equipment from Applied Materials, KLA Corp, Lam Research etc.. Together these US companies constitute very large market shares of the semiconductor equipment. They also have very large installed based in China. Chinese companies can not replace them all in the short or even medium terms.

In the case of SMIC sanction, they restrict the level of technology, for example, 10nm and below. SMIC could continue with lower level technology. The worst case scenario would be Fujian JinHua, when they had to stop all fab construction immediately with the equipment manufacturers stopping their deliveries and services right away after the sanction was announced.

So I would breakdown the severity of the sanction into three categories in terms of impact: 1) do they affect all future equipment sales? 2) do they affect future equipment sales of advanced technologies? 3) do they affect the current installed base and/or existing fab projects?

Click to expand...

AMAT and LAM already have Chinese counterparts like Naura and AMEC, and most importantly, they have Chinese parts suppliers like SGS Semi mentioned earlier on this thread, who can supply critical components.

The other thing is that the US doesn't make much semiconductors anymore, their entire semiconductor equipment supply chain heavily depends on overseas sales, in particular, to China. Nobody buys semiconductor equipment every day so it is hard to win a customer. Most customers stick with what they know but if they are stabbed in the back too often, you can never win them back. In contrast, wafer fabs have stable business because people will buy semiconductor devices every day.

FairAndUnbiased said:

Nobody buys semiconductor equipment every day so it is hard to win a customer.

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Exactly, the semiconductor industry is a very niche industry, once a company lose a costumer, that costumer may be gone forever and recovering that lost is damn hard, the entire semiconductor industry is build above a graveyard of death companies, you just have to see the state of Nikon after losing Intel as a costumer or how the US lost their lithography industry.
So China may be a decade of developing a production ready EUV scanner (in my personal opinion they are closer), that may sounds like a lot for some people but for ASML that is too close for comfort.
I think the United States may be the only country in the planet that punish their own companies with these types of controls, every single country in the planet is fighting to keep the competitive high tech advantage they have, the Germans wants to keep selling machine tools to China, not the Americans thought, their politicians are doing everything in their power so the U.S. become China's supermarket, they don't want to sell anything high tech to China, they just want to sell corn and wheat.

Beijing Guowang Optical Technology Co. Ltd. open bidding, plans to purchase 2 sets of five-axis CNC machines.

The research and development center will be put into operation in 2023 and will have R&D, design and mass production of exposure optical system of 28nm lithography machine.

集微网消息，爱集微查询中国国际招标网发现，日前北京国望光学科技有限公司发布国
际公开竞争性招标，拟采购2台五轴联动立式加工中心，投标截止时间（开标时间）为
2022年5月26日。

此前公开信息显示，国望光学光刻机曝光系统生产基地项目已相继走过基建与洁净工程
节点，新的招标信息或显示生产基地项目将进入设备安装调试阶段，根据计划，国望光
学研发基地将于2023年投入运行，届时该基地将拥有350/280nm节点、90/110nm节点、
28nm及以下节点极大规模IC制造投影光刻机曝光光学系统产品的研发、设计与批量生产
供货能力。

weig2000 said:

It could go beyond the most advanced technology and lithography machine. It can include equipment from Applied Materials, KLA Corp, Lam Research etc.. Together these US companies constitute very large market shares of the semiconductor equipment. They also have very large installed based in China. Chinese companies can not replace them all in the short or even medium terms.

In the case of SMIC sanction, they restrict the level of technology, for example, 10nm and below. SMIC could continue with lower level technology. The worst case scenario would be Fujian JinHua, when they had to stop all fab construction immediately with the equipment manufacturers stopping their deliveries and services right away after the sanction was announced.

So I would breakdown the severity of the sanction into three categories in terms of impact: 1) do they affect all future equipment sales? 2) do they affect future equipment sales of advanced technologies? 3) do they affect the current installed base and/or existing fab projects?

Click to expand...

I think this semiconductor industry China must master at all costs. Besides,China must keep Japan n Korea close n settle territorial disputes with them. Anglo Saxon r the real challenge for China. They r not interested in win-win, want to contain China at all costs.

tokenanalyst said:

So they should be careful because is very well documented that stringent exports controls have backfire on the US industry in the past.

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I don't think they really care about this.

US is a superpower and for a superpower strategic win on an "adversary" is above any economic consideration. The same is true for China, btw, although at the moment China has still to play on the defensive side, but it is easy to see that, for instance, China's strategic vision on tech independence is pushed forward in a "no matter what" way, as it should be BTW.

On the positive side, I think US banning on semi equipment, if it arrives at all, it will be anyhow too late. The only sensible thing is to block access to EUV technology, and they have already done it, since few years. But banning other semi equip is too weak now, first because to be effective it should be a total industry ban, not a US firms only, and this is not easy to achieve, and secondly because local firms have mostly caught up already.

A new "strategy" could be to ban China equipment makers. The easy low hanging fruit would be to forbid non-chinese IC companies to buy Chinese equipment and so shrink their potential market and revenue growth: US can, and probably will do it, under some idiotic slogan like "clean silicon" or something like that. The second step would be to ban Chinese firms altogether, although at the moment it is not so clear how to do...but when it comes to sanctions and banning US has huge creativity.

european_guy said:

The easy low hanging fruit would be to forbid non-chinese IC companies to buy Chinese equipment and so shrink their potential market and revenue growth: US can, and probably will do it, under some idiotic slogan like "clean silicon" or something like that. The second step would be to ban Chinese firms altogether, although at the moment it is not so clear how to do...but when it comes to sanctions and banning US has huge creativity.

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Banning Chinese equipment in US soil is easy and with the stroke of a pen, they already done it with telecom equipment, banning Chinese equipment from the rest of the world will required each ally to agree which is easier said than done, semiconductor equipment is very expensive and if the Chinese offer a good product at relative low price will be very hard not to buy, very different from telecom. The US can't "forbid" anyone from buying anything except by the use of secondary sanctions and that will be in the eyes of the Chinese an act of war.