WSJ coverage on Gerald Yin of AMEC.
Here is the
.
Entrepreneur Caught in the Middle of U.S.-China Chip War
An American’s vision to build a global semiconductor player in China is clouded by moves to restrict supply chain
By
Nov. 9, 2022 5:30 am ET
Semiconductor whiz Gerald Yin left the U.S. and spent 18 years in China building what he said would be a worldwide powerhouse in chip-making equipment. Now the American citizen’s lifework has been thrown into uncertainty as
undermine the global industry integration he celebrated.
Mr. Yin’s company,
Inc., or AMEC, had been making big strides and was gunning for industry leaders based in the U.S. and Japan when Washington stepped in. Decades younger than its rivals, the Chinese maker of etching equipment and other tools for the semiconductor industry has said it picked up customers including Robert Bosch GmbH and U.S. chip maker
Inc. Its equipment is used on dozens of production lines in Europe and Asia.
Then, the U.S.
in October, the country’s biggest salvo against China’s tech industry so far. The new rules blocked China’s advanced-chip-development industry from access to U.S. technology as well as
.
The Biden administration said the rules were aimed at keeping American chips
. Their wide sweep may further bifurcate global supply chains and stymie China’s broader chip industry, setting it back years in efforts to catch up with more advanced U.S. and Asian rivals.
The new rules threaten AMEC in several ways. Of roughly 20 top managers and engineers at the Shanghai-based company, Mr. Yin and six others are U.S. citizens, according to the company’s latest annual report.
AMEC’s production could also be hampered by lack of access to U.S. or other countries’ parts and materials. And non-Chinese customers may shy away from equipment made by a company held up as a flag-bearer of Beijing’s chip ambitions.
Mr. Yin said in a recent earnings call that about 60% of the components and materials AMEC uses in its major products are made in China, suggesting that it relies on imports for nearly 40%. AMEC said in its 2021 annual report that it procured some materials from the U.S. but described that as a low percentage of the total.
The company’s signature products are etching tools, which help carve out circuit patterns onto a semiconductor wafer, a key step in the manufacturing process.
AMEC and Mr. Yin didn’t respond to questions. The company said on Chinese social media on Oct. 25 that it was operating normally so far and that its development was “stable, healthy and safe.” It said it abided by laws and regulations wherever it operates.
On AMEC’s social-media account on Oct. 28, Mr. Yin said the company aimed to develop into an international leader.
Born in China, Mr. Yin attended prestigious schools in the country and earned a doctorate from the University of California, Los Angeles, before embarking on a U.S. semiconductor career.
Two U.S. companies—
Inc. and
Corp. —are leaders in etching, and Mr. Yin, AMEC’s founder, worked at both. Those two, plus
Ltd. , accounted for 91% of the worldwide dry-etch-system market in 2021, according to consulting firm
Inc.
In 2004, Mr. Yin was 60 years old and thinking of retirement when a middle-school classmate who was a government official in China invited him to come home, according to a 2019 report by the state-owned Xinmin Evening News.
“It was time to make a contribution to the motherland and its people,” the paper quoted Mr. Yin as saying. The report said he took a group of 15 experts with him to Shanghai.
Early investors in AMEC included
Inc., U.S.-based venture-capital fund Walden International and an arm of South Korea’s Samsung Group. The company’s biggest shareholder is an investment arm of the Shanghai government, and the No. 2 shareholder is an entity controlled by a national semiconductor-investment fund, according to Chinese corporate-registry databases. It also receives government research subsidies.
Within three years of returning to China, Mr. Yin and his team developed their first etching machine. This was the first time that China was able to make such high-end competitive semiconductor equipment, according to state media reports.
Domestically, social-media commentators called the company a potential national champion that would help China’s chip industry achieve self-sufficiency.
By 2015, AMEC had gotten far enough that the Commerce Department ended export controls of certain American etching machines to China because it said machines of comparable quality were already available from a Chinese source. Mr. Yin said at a technology forum in Shanghai in 2018 that the department was talking about his company’s products.
The success didn’t come without controversy. There was a 2007 lawsuit in a California federal court by Applied Materials alleging AMEC misappropriated trade secrets. Mr. Yin, who was named as a defendant, told Chinese media he didn’t do anything wrong. The companies settled their litigation in 2010.
Another lawsuit alleging patent infringement—this one filed in Taiwan by Lam Research against AMEC—was dismissed in 2009 by Taiwan’s Intellectual Property Court.
As the company and U.S.-China tensions grew, Chinese social media’s depiction of Mr. Yin as a hometown champion striking fear into the West prompted the company to respond. In a 2020 statement, AMEC said the stories about Mr. Yin were exaggerated.
In August, Mr. Yin said AMEC was based on the idea of China and everyone else being part of the same global industry.
“We would only be able to cover 15% of the global market at most if we only focus on the domestic market, so we have to carry forward a strategy to develop globally,” he said.