Chinese semiconductor industry

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Pkp88

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tokenanalyst said:
I don't think the CHIP Act will be enough to offset SME companies future losses and more taking into account that probably a lot of that money is going to be spend in buybacks, bonuses and recouping the investment of current fab builds. But not even money can offset the biggest risk for companies abandoning the Chinese market and that risk is losing their monopolistic position, some of this companies need their monopoly to keep their high margins and high profits. By example Imagine that China manage to commercialize EUV lithography, that could be catastrophic for ASML, they need to keep a monopoly on EUV in other to make a profit, absolutely any competition will cheapen the technology and eat their profits. The same goes for other technologies.
Again, If it was just money I don't think KLA, AM or LAM will care a lot if they know that nobody else will occupy their position in China. That market is big enough that any company that gets big there would get big worldwide and the last thing a company like Applied Materials wants is not only to have to compete on quality but on price.
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Until China unveils a domestic DUV process from EDA to end output don’t think this is a real issue for established western IC players for the next few years (which is what matters for shareholders). If this was a near term issue not sure why Chinese firms would be dropping record capex on non-Chinese equipment
 
FairAndUnbiased

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Pkp88 said:
Until China unveils a domestic DUV process from EDA to end output don’t think this is a real issue for established western IC players for the next few years (which is what matters for shareholders). If this was a near term issue not sure why Chinese firms would be dropping record capex on non-Chinese equipment
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It is not record capex on non Chinese equipment. It is just record capex overall. Chinese equipment companies are also having record sales.
 
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tokenanalyst

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Pkp88 said:
Until China unveils a domestic DUV process from EDA to end output don’t think this is a real issue for established western IC players for the next few years (which is what matters for shareholders). If this was a near term issue not sure why Chinese firms would be dropping record capex on non-Chinese equipment
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Yeah market share is important for shareholders but short term thinking usually doesn't lead to good long term results, like most things in life will probably not happen all the sudden but the trend could built up with time, as Chinese IC, SME and software companies get verified and battle tested by Chinese fabs and IC design companies, they will become stronger in that market and by default worldwide, so it could become an enticement for IC design houses and IC manufacturers to see if they could cut cost by testing products from alternative suppliers. By example Samsung already validated some Chinese EDA companies, some of the clients of Empyrean EDA are Western companies, I read the other day that AMEC is selling their 5nm etching equipment to the US and I also read some of the cleaning equipment use by Intel was probably made in Shanghai by ACM Research Shanghai. The trend is there.
If American National Security Hawks get their way they will be tying the hands of their own companies, Naura will be able to compete with LAM in the deposition market for example in the 7nm nodes in the US while LAM could soon no be able to compete with Naura in the same market in China.​
 
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european_guy

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paiemon said:
Rightly or wrongly, the US believes their central role/contribution in those industries and supply chains allow them to regulate to a degree where they allow their content to end up in. To use an analogy, as an artist you create work that others may license freely, pay a royalty to integrate into their own works unpertubed. However, if you the artist believes others are using your work a way that is costing them $$ or damaging to them (e.g., making something offensive) you use the legal system to stop them from using your content. That is essentially what the US is doing with export controls. Because US content is so prevalent in almost every supply chain due to how the industry developed over the decades the tentacles spread all over the world. Due to a combination of inertia, industry consolidation, ease of adoption using US content was the fastest, cheapest and most cost effective approach.

One may wonder why this is only an issue now, after all export controls have been around for decades without much disruption. The goal of export controls has always been to balance commercial interests with broader security concerns. There is expected to be leakage, but the purpose was to provide industry with a predictable system for growing foreign sales while weeding out obvious no-no's (i.e., North Korea, Cuba, selling weapons to Russia, etc). US Commerce Department & DoD understood (and still does) that industry thrives on predictability, and the rules were established to promote 99% of dual-use commerce while blocking the obvious problem areas (e.g. the surgical scalpel approach). This allowed companies to grow, invest and sustain the industrial base/technological lead through their worldwide commercial success which in turn has spillover effects into national security (this sounds very similar to what China is doing). This was also understood by the political leaders at the time too, whatever their faults. System worked, everyone was more or less happy.

You are right there is alot of lobbying by companies to protect their business, that's just self-preservation since no company will take government restrictions willingly, especially if it costs them big $$$. But it was a generally accepted principle that punching your most successful industries in the face was not smart business nor smart national security. That was the simple successful lobbying argument which is quiet logical and ironically was Trumps own push-back against export control tightening in 2019 due to the fear it would lead to offshoring. The problem now is that the political class and their appointees have lost their sh!t, pardon my language and decided that in order to achieve their political goals, they are willing to throw leading successful companies under the bus. Basically they believe that companies have no choice but to take it to the face because they have to stay in the US to remain innovative and leading edge. Thus, the US DoD/Commerce Department have to scramble to come up with adjustments to appease the politician moods. That is why you see convoluted rules like the "uniquely capable of xyz" which are designed to appease politicians with the illusion of blocking exports while allowing industry enough loopholes to drive trucks through. Of course mirages fade over time hence the new rules.

Now that the system of predictability has been thrown out the window, to maintain their success going forward companies are going to have to make adjustments to minimize the impact of the ever unpredictable rules of commerce. You can't rip up decades of success overnight, but companies have gotten the message that for certain sensitive technologies if you want to be a global leader being heavily US centered isn't a good thing. There definitely will be strong local ecosystems and supply chains in key markets like China but I fully expect the American multinationals to continue to be strong industry players, they will just have de-Americanized and dispersed their assets as far as possible. After all, if American companies think relying on US content is a liability, why would any OUS country think differently if they had a choice?
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One issue that I see with the current wave of export control, is that it seems to miss a final goal, a final target, it seems more a bunch of day-by-day decisions.

Behind this void banner of "national security" US administrators hide the rationale and hence their responsibility to the nation (the US, not China) of what they are doing.

As an outsider observer I can see that the unspoken final target is the total decoupling of the semiconductor supply chain: there will be two supply chains, one in China and one in the "rest of the world". I am really not able to think US administration has a different target from this, otherwise I would need to seriously doubt their professionalism, considering the we are going exactly in this direction and at a furious speed too, and not only due to China, US decisions have hugely accelerated the process.

I think that if the final target is the total decoupling, then it should be made explicit by US in some kind of official and public policy, because it is an historical decision that will affect US in the decades to come, and US people should know about it and what their administrators have in mind. Instead US administrators just hide themselves behind the "national security" banner to avoid taking responsibility for this historical act:

1. China is a 1.4 billion people market

2. China imports more chips than oil

3. China until few years ago did not have a suitable supply chain

4. What US calls "rest of the world" is not the real rest of the world, but just a small part of it. Once you have enabled an alternative and independent supply chain, you will be a fool to think they will not move out of China.

All this would require an open, public and serious discussion in US: is the decoupling from China of the full semiconductor supply chain really in the interest of US today? And what in 10, 20 years form now?
 
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tokenanalyst

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A certain type of hybrid integrated module circuit of the two institutes has made breakthrough progress​


Recently, a certain type of hybrid integrated module circuit of the two institutes has made a breakthrough. The developed functional prototype has passed the test, and various technical indicators have reached the advanced level of similar foreign products.
This type of hybrid integrated module circuit product integrates 200 chips and devices in a space of tens of millimeters. It has the characteristics of high integration, high reliability, and high output power. It also has functions such as synchronization, protection, and fine-tuning. Product development is technically difficult. big. In just four months, the technicians of the project team completed the system simulation design, device selection and prototype development, breaking through the dual-loop high-precision control circuit, bidirectional transmission magnetic feedback isolation, high-frequency magnetic device simulation design, high With key technologies such as density packaging and assembly, a functional prototype has been successfully developed, and various key technical indicators have reached expectations.
In the next step, the project team will continue to optimize product performance and improve product reliability based on the requirements of serialized independent research and development, and provide strong support for the implementation of the "14th Five-Year Plan" development strategy with full enthusiasm for work.

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tokenanalyst

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SMIC expands production again, plans to invest 7.5 billion US dollars to build a 12-inch wafer foundry production line in Tianjin​


The agreement shows that the planned 12-inch wafer foundry production line has a planned construction capacity of 100,000 wafers per month, and can provide foundry and technical services at different technology nodes from 28nm to 180nm. The products are mainly used in communications, automotive electronics, consumer electronics, industry and other fields. It is planned to be located in Saida Emerging Industrial Park, Xiqing Development Zone. At the same time, SMIC will set up a wholly-owned production-oriented independent legal person company in Xiqing Development Zone with a registered capital of 5 billion US dollars and a total investment of 7.5 billion US dollars (about 50.59 billion yuan).
In this project, Tianjin Xiqing Economic Development Group Co., Ltd. and Tianjin Xiqing Economic and Technological Development Zone Management Committee agreed to provide SMIC with land use support, project industry support, project talent support, project infrastructure support and other support for the project.
SMIC promises that Xiqingxin Company will participate in the auction of the project land according to the agreed conditions and procedures for the construction of the project. The company also stated that the project to be invested in this agreement is in line with the company's development plan and will help the company's long-term development. The project funds come from the company's own funds and self-raised funds, which will not have a significant impact on the company's financial status and operating results, and will not harm the interests of the listed company and all shareholders.
Previously, in addition to the continued expansion of existing production lines, SMIC is also building new 12-inch production line projects in Beijing, Shenzhen and Shanghai. The planned new wafer production line in Tianjin is another newly built by SMIC. 12-inch production line project. From the point of view of process nodes, 28nm is a mature process that is widely used at present, and SMIC's expansion is mainly based on 28nm.
2022 is the peak period for SMIC's investment, and SMIC's annual capital expenditure is mainly used to continue to promote the expansion of the old factory and the three new factory projects. According to the financial report, as of the end of June this year, SMIC had committed 6.98 billion yuan in spending on building buildings, 72.22 billion yuan in purchasing machinery and equipment, and 305 million yuan in purchasing intangible assets, and 1.496 billion yuan in capital expenditure commitments for associates.
In China, domestic semiconductor manufacturing companies such as SMIC are significantly expanding their production capacity. The Semiconductor Industry Association (SIA) of the United States pointed out in a research report in early 2022 that with the geopolitical game, the Chinese semiconductor industry will turn most of its funds to mature manufacturing technology. . From September 2020 to November 2021, Chinese wafer makers added nearly 500,000 wafers per month (WPM) capacity at nodes above 14nm, while only adding 10,000 wafers per month at advanced nodes round capacity. China's new wafer capacity accounts for 26% of the global total.

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