Chinese semiconductor thread II

[mst]

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CFO Roger Dassen also confirmed that older DUV tool not covered by Dutch licensing requirements would be directly restricted from China by U.S. rules, in some instances.

"We should now expect that for 2024 we will not get export licences for shipment into China for, let's say, advanced immersion, so NXT:2000i and up, tools," Dassen said, referring to Dutch licensing rules announced in June.

"And we should also expect for a handful of fabs not to get export licences for China for (older) NXT:1970i and NXT:1980i immersion tools," he added, due to U.S. direct restrictions imposed in October.

It was the first public confirmation by the company that U.S. rules would apply to the lower-grade 1970i tool in its DUV series.

 

[tokenanalyst]

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CFO Roger Dassen also confirmed that older DUV tool not covered by Dutch licensing requirements would be directly restricted from China by U.S. rules, in some instances.

"We should now expect that for 2024 we will not get export licences for shipment into China for, let's say, advanced immersion, so NXT:2000i and up, tools," Dassen said, referring to Dutch licensing rules announced in June.

"And we should also expect for a handful of fabs not to get export licences for China for (older) NXT:1970i and NXT:1980i immersion tools," he added, due to U.S. direct restrictions imposed in October.

It was the first public confirmation by the company that U.S. rules would apply to the lower-grade 1970i tool in its DUV series.

ASML is done in China, 40 years building a brand in the country, gone.

 

[gelgoog]

The fact that China is getting the tools at all is due to the industry being in a major downturn and the tool vendors needing the sales.

But the practice of continuing to import machine tools means China won't be funding its own machine tool industry. I think the Chinese government should subsidize Chinese machine tool purchases and properly fund the industry to speed up the movement towards Chinese machine tools. There should also be tariffs to reduce the amount of imported chips. China should slap tariffs in products containing imported chips of US origin.

 

[tokenanalyst]

The fact that China is getting the tools at all is due to the industry being in a major downturn and the tool vendors needing the sales.

But the practice of continuing to import machine tools means China won't be funding its own machine tool industry. I think the Chinese government should subsidize Chinese machine tool purchases and properly fund the industry to speed up the movement towards Chinese machine tools. There should also be tariffs to reduce the amount of imported chips. China should slap tariffs in products containing imported chips of US origin.

Some of the machines Chinese companies are buying are for part supply, "even mature machines share parts with more advance ones", others are for replacements for current working machines.

 

[european_guy]

China imports over 400 lithography machines from the Netherlands in past five years​

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China imported semiconductor equipment for IC manufacturing worth US$27.4 billion in 2023, up 46.48% from a year ago

In 2019 and 2020, China imported 40 and 57 lithography machines from the Netherlands, respectively. The figure quickly rose to 93, 78, and 176 units in the following three years. During the past five years, China imported a total of 444 lithography machines

ASML imported machines (note this is just ASML! Not Japan Canon / Nikon)

2019 -> 40
2020 -> 57 (+42%)
2021 -> 93 (+63%)
2022 -> 78 (-16%)
2023 -> 176 (+125%) !!

My personal comment is that SMEE needs to ramp up production very aggressively to avoid China slowdown. Due to these very unusual times, probably SMEE will start with medium/advanced machines (28-40nm) because ASML can still cover the more mature nodes, but from that they will have to move to more mature nodes too in 2025/2026 because ASML exports will only shrink more and more, eventually no ASML machines will be sold in China. This is the scenario China has to assume, to avoid being caught off-guard.

At the same time they will have also to move to more advanced nodes, so to cover all the DUVi range (14nm and 7nm) within a couple of years. This will be more a technological effort than a production effort because only some SMIC lines and few other fabs needs at the moment sub 28nm machines.

It is good that Huawei seems to have a big involvement with SMEE: in the next 2/3 years SMEE will need a serious engineering/production effort, and only a big industrial actor like Huawei has the required expertise to plan and effectively manage all the logistic / process / industrial ramp-up that will be required.

 

[gelgoog]

It is kind of funny. They imported less equipment, but it is more expensive. And they imported more ASML litho machines.
So I would assume most of the purchases are for immersion lithography equipment and other associated equipment for the same process. And the lack of imports of other equipment either means that China can now build that equipment itself, or that they are stockpiling lithography machines, or both.

 

[sunnymaxi]

The fact that China is getting the tools at all is due to the industry being in a major downturn and the tool vendors needing the sales.

But the practice of continuing to import machine tools means China won't be funding its own machine tool industry. I think the Chinese government should subsidize Chinese machine tool purchases and properly fund the industry to speed up the movement towards Chinese machine tools. There should also be tariffs to reduce the amount of imported chips. China should slap tariffs in products containing imported chips of US origin.

It is kind of funny. They imported less equipment, but it is more expensive. And they imported more ASML litho machines.
So I would assume most of the purchases are for immersion lithography equipment and other associated equipment for the same process. And the lack of imports of other equipment either means that China can now build that equipment itself, or that they are stockpiling lithography machines, or both.

agreed with you here but ..

last year, 874+ total bids took place in which 47 percent won by local manufacturers. it was only 22 percent in 2022 year. look at the jump. all domestic equipment makers rapidly increasing the production and verifying the customers.

i believe this big purchase happened in 2023 only for lithography machines. Chinese fabs stockpile the machines one last time. from this year onward, imports will go down rapidly..

within 3 to 4 years, all Non-Lithography foreign tools makers will entirely wipe out from mainland. by then SMEE's Litho will be in mass production too ..

 

[measuredingabens]

Trendforce reports that 350 semiconductor projects in China thrived during 2023.

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[Wrought]

It does no good to worry about import dependencies and localization. These things simply take time, years or even decades. Look at other industries, EVs or solar panels or whatever you want. How long did it take for local competitors to acquire the skills and scale up? How much longer before they were able to outcompete foreign brands and eventually reach the export market? None of them achieved this overnight. It is a deliberate and iterative process. The fact of the matter is that imports will continue to play an vital role until they can be gradually phased out, and rushing the process will only hurt overall development.

 

[tphuang]

it's quite clear that a lot of their imports of ASML lithography machines were effort to stock things up before sanctions hit. SMIC at this point probably has 2-3 years of lithography machine support.

If SMEE cannot ramp up enough to at least support the couple of fabs that will be prohibited from buying 1980i, then i would be very surprised

It does no good to worry about import dependencies and localization. These things simply take time, years or even decades. Look at other industries, EVs or solar panels or whatever you want. How long did it take for local competitors to acquire the skills and scale up? How much longer before they were able to outcompete foreign brands and eventually reach the export market? None of them achieved this overnight. It is a deliberate and iterative process. The fact of the matter is that imports will continue to play an vital role until they can be gradually phased out, and rushing the process will only hurt overall development.

I have no idea what you are talking about. It took them just a couple of years to outcompete foreign brands. A lot longer than it will take them in semiconductor. Stick to what you know