from an author in the Chinese internet.
Chinese semiconductor industry
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Tokyo Electron sees rising risk in US chip war on China
Tokyo Electron is seriously concerned about the potential impact of America’s escalating assault on China’s semiconductor industry.
Japan’s largest – and the world’s third-largest – manufacturer of semiconductor production equipment in terms of revenue, Tokyo Electron made more than 25% of its sales to customers in China last year.
In July, American semiconductor equipment makers Lam Research and KLA told investors and the media that the US government had broadened its regulation of exports to China from circuit design rules of 10-nanometer (nm) or smaller to 14-nm or smaller.
This increases the share of equipment that must be pre-approved for export while putting a greater amount of Chinese semiconductor production at risk of disruption.
Tokyo Electron is seriously concerned about the potential impact of America’s escalating assault on China’s semiconductor industry.
Japan’s largest – and the world’s third-largest – manufacturer of semiconductor production equipment in terms of revenue, Tokyo Electron made more than 25% of its sales to customers in China last year.
In July, American semiconductor equipment makers Lam Research and KLA told investors and the media that the US government had broadened its regulation of exports to China from circuit design rules of 10-nanometer (nm) or smaller to 14-nm or smaller.
This increases the share of equipment that must be pre-approved for export while putting a greater amount of Chinese semiconductor production at risk of disruption.
In early August, a senior Tokyo Electron executive told investors and the media that the change might make it impossible for Chinese companies to produce semiconductors. While that is almost certainly an exaggeration, the damage could be substantial.
In the five years to March 2022 (the company’s fiscal year ends on March 31), Tokyo Electron’s semiconductor equipment sales in China increased by 5.7 times to 513.5 billion yen (US$3.9 billion), rising from 12.1% to 26.4% of the total.
The last two years were particularly strong, with sales up 68% in the year to March 2021 and up 58% in the year to March 2022. These figures are high enough to suggest that China has been buying as much equipment as possible ahead of potential future US sanctions.
Tokyo Electron’s other regional markets ranked as follows last fiscal year: South Korea 19.4%, Taiwan 18.5%, North America 13.8%, Japan 11.8%, Europe 5.6% and Southeast Asia and other regions 4.5%. This data, and the data behind the chart, was taken from the company’s investor relations materials.
Tokyo Electron may be somewhat less dependent on China than the industry as a whole: data research company Statista calculates that China accounted for 29.6% of worldwide semiconductor equipment sales in 2021.
According to The Information Network, a microelectronics research firm, the figures for Lam Research, KLA and American industry leader Applied Materials were 25%, 30% and 33%, respectively.
Beijing’s “zero-Covid” policy has taken a toll in recent months and Chinese equipment demand may become less prominent anyway now that TSMC, Intel, Samsung, SK hynix and the Japanese have launched large new semiconductor investment programs. But China remains a very large market that, paradoxically, may become even more influential as sanctions are tightened.
Tokyo Electron makes five major types of semiconductor production equipment: photoresist coater/developer, etch, deposition, cleaning and wafer probe test. It has a significant global market share in all of these products, which also account for most of its sales and profits.
Its primary competitors are American, Japanese and European but Chinese companies are developing their capabilities in every step of the semiconductor manufacturing process. A brief review of Tokyo Electron’s products shows:
Photoresist Coater/Developer
Tokyo Electron Market Share: 89%
Major Competitor: Screen Holdings (Japan)
Chinese Competitor: Kingsemi
Dry Etch
Tokyo Electron Market Share: 29%
Major Competitors: Lam Research (USA), Applied Materials (USA), Hitachi (Japan)
Chinese Competitor: Advanced Micro-Fabrication Equipment Inc. (AMEC)
Deposition
Tokyo Electron market share: 39%
Major Competitors: ASM (Netherlands), Applied Materials (USA), Lam Research (USA), Kokusai Electric (Japan)
Chinese Competitors: Naura, Kunsheng, Qingdao Yuhao Microelectronics Equipment
Cleaning
Tokyo Electron market share: 25%
Major Competitors: Screen Holdings (Japan), Applied Materials (USA), Lam Research (USA)
Chinese Competitor: ACM Research
Wafer Prober
Tokyo Electron market share: 47%
Major Competitors: Accretech-Tokyo Seimitsu (Japan), Form Factor (USA), MPI (Taiwan)
Chinese Competitors: Semishare, Kunsheng
The market share figures come from Tokyo Electron’s investor relations materials. They are derived from studies by market research organizations Gartner and TechInsights.
For explanations of the semiconductor manufacturing process, refer to the TEL Nanotec Museum and ASML’s “6 crucial steps in semiconductor manufacturing” .
Of the Chinese companies mentioned above, only AMEC appears to be a threat at present. Its etch equipment has reportedly already been sold to TSMC, UMC and SMIC and tested by Samsung, Intel and Micron for processes as advanced as 5-nm.
According to statistics provided by the China Electronic Production Equipment Industry Association, 56 Chinese semiconductor equipment manufacturers had 5.2% of the global market and 17.3% of the Chinese market in 2020, with the top 10 accounting for nearly 80% of their combined sales.
According to industry association SEMI, there are about 80 Chinese semiconductor equipment makers in total.
This is reminiscent of the development of the Chinese electric vehicle industry, which began with hundreds of start-ups and then gradually consolidated into a few large, competitive companies.
The development of Tokyo Electron also comes to mind. Established in 1963 as an importer and distributor of American equipment, it first moved up the value chain to domestic production through joint-ventures with foreign partners and then to 100%-owned product development and manufacturing.
Unlike the Chinese, Tokyo Electron and the rest of the Japanese semiconductor equipment industry stayed on good terms with the Americans but their goal was the same: to learn and localize the technology.
As the US ratchets up sanctions and tries to rope Japan, South Korea and Taiwan into its anti-Chinese “Chip 4” semiconductor alliance, China is being forced to develop its own manufacturing technology as rapidly as possible.
The Americans love to talk about supply chain resilience, but in this case, it is the Chinese that don’t have it. They will no doubt continue to make large investments that in an ordinary market environment would not be economical, to the long-term detriment of Tokyo Electron and other established makers of semiconductor production equipment.
Tokio Electron understands that in China the party is almost over for them.
The usual very biased and "obsolete upon arrival" western article on China semiconductor industry.
AMEC will definitely eat TEL's launch in China on dry etching, but the same will do ACM Research in cleaning and NAURA and Piotech (even not mentioned in the article) in deposition. Regarding Coater/Developer, where TEL has a whopping 89% market share, maybe Kingsemi is still not there, but it is growing very fast.
Of course Japan companies stayed in "good terms" with US!
Japan does not have nor aims to have any strategic independence, Japan is a satellite state since 70 years already. China instead has it and is strongly determined to defend it so, almost by definition, it means it cannot be in good terms with US.
Thanks for pointing this out. I was thinking about doing it, but figured that it's common knowledge for people who follow this thread closely. Surprisingly, most people in the west, even those supposedly industry insiders, have no clue where China's semiconductor equipment vendors are in terms of their current capabilities.
antiterror13
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@european_guy
Well, SMIC had bought (2 or 3 ?) EUV and still got cancelled anyway .... so there is no guarantee even you had bought them, unless it has been delivered
What happen even it has been delivered and then the US told ASML to stop supporting the machines that already delivered to China? ... it is still possible though
So the only way for China is fully domestically, no other way
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antiterror13
Brigadier
How did you know that?, I am expecting earlier
antiterror13
Brigadier
did u mean SMEE DUV tested by SMIC ?
DUV of ASML......
about SMEE completed 14nm with Huawei and they are working on 7nm with Hsilicon and shanghai optical institute...also with Huawei logic chip EDA investment also completed next year but with 7nm
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