The United States is trying hard to contain technological progress in China. Recently, Washington announced a wide range of restrictive measures against the export of semiconductor technologies and finished microcircuits to China.. These measures involve, in particular, secondary sanctions against any companies, who will cooperate with Chinese advanced chip manufacturers. Chinese experts now agree that, that the technological separation of the United States and China, likely, passed the point of no return.
US sanctions are, that U.S. semiconductor companies now need permission to export high-performance chips to China, designed for artificial intelligence applications. Even microcircuits of non-American production, related to artificial intelligence and supercomputers, will require permission from the US authorities to export to China.
US companies will need to obtain permits to supply equipment to Chinese manufacturers, if their factories produce memory chips or processors sized 16 nanometers and below. Also, any "persons from the United States" must obtain permission from the US authorities., if they want to participate in the development or production of semiconductors at certain manufacturing sites in China.
In addition to this, the US added a leading Chinese manufacturer of memory chips YMTC and 30 other Chinese companies to the list of "unverified".
Han Xiaomin, General Manager of Beijing Semiconductor Investment Company Jiwei Insights, considers, that strict adherence to the US-announced measures would jeopardize up to 30% income of the giants of the semiconductor industry in the US and in the world, whose income in the Chinese market is a third of their total income.
Of the largest companies, the world's well-known manufacturers of semiconductor equipment and microcircuits from South Korea and Japan will be the most affected., these closest Asian allies of the US. They are also members of the Chip 4 alliance created by the Americans.. Companies in these countries have close ties to the semiconductor market in mainland China., so they took a low profile on the Biden administration's new rules.
South Korean SK Hynix He stated, that achieved from the US Department of Commerce approval of the supply of equipment and products, necessary for the development and production of semiconductor devices DRAM (dynamic RAM) at Chinese enterprises without additional permits. DRAM chips are flash memory components, used in smartphones, personal computers and servers. SK Hynix has factories for the production of microcircuits in the PRC in the city of Wuxi (Jiangsu Province).
The situation with the South Korean Samsung Electronics. According to preliminary information, it has also received approval from the US government to import chip manufacturing equipment for a year for its factories in China without further approval from Washington..
These indulgences, which the United States is forced to resort to immediately after the announcement of anti-China sanctions, means, that it is extremely difficult for the Biden administration to exclude China from the world's chip manufacturing and supply chains: one has to reckon with the existing division of labor and the conditions for the profitability of production in the industry.
According to the industry association SEMI, China has long been the world's largest market for semiconductor manufacturing equipment.. The sales volume of such equipment in mainland China last year reached 29,62 billion. Doll. (nearly 29% world market for this type of equipment).
Foreign suppliers are concerned, that import substitution by China of chips in its domestic market will mean a critical drop in income for them and the risk of being squeezed out of the Chinese market. It concerns, eg, Taiwanese TSMC (Taiwan is also a member of the Chip 4 Alliance). South Korea and Japan compete with Taiwan in the supply chain of the semiconductor industry in the Chinese market. If TSMC will be forced to reduce its presence in mainland China, this will provide a larger market for its South Korean competitors.
A sufficiently high level of development of microelectronics in China, combined with a capacious and attractive market, will allow Chinese companies to maintain regional supply chains and overcome the consequences of sanctions, in spite of difficulties. Gao Shiwang, Director of China Chamber of Commerce for Import and Export of Machinery and Electronic Goods, He speaks, that the latest US restriction could slow down, but not stifle China's technological growth. Now China is creating a China-South Korea exchange-traded fund, which will invest in leading Chinese and Korean semiconductor companies, including Samsung Electronics.
Chinese companies are actively moving to new technologies for stacking transistors in microcircuits, trying to achieve higher processor performance in relatively mature technological processes. China's largest contract chip manufacturer SMIC began supplying chips, produced according to 7nm standards on previous generation lithographic equipment. China faces challenge to improve localization of key chip manufacturing equipment (now it is less 10%), in particular lithographic machines, by launching the production of Chinese components.
Despite increased American repression, SMIC in the second quarter of the year increased revenue. Chinese experts agree that, that American companies are unlikely to increase returns without exporting chips to China and are unlikely to be able to reinvest enough funds in research and development, necessary to restore their leadership in the industry.
Victor PIROZHENKO
