Although the US continues to escalate and suppress the "technology Cold War" in the context of the "technology Cold War" that tries to curb China's science and technology development, as one of the cores of the new round of technology Cold War, semiconductor equipment industry players are unwilling to express their opinions on this. So, how much impact will the latest US technology ban have on the semiconductor equipment industry? Will semiconductor equipment operators give up on the Chinese market?
As this Sino-US technology "cold war" intensifies, semiconductor equipment manufacturers are basically silent. Some industry players are worried that the two major economies may further "decouple", and the United States' ban on technology export restrictions will cause chaos in the global chip market and further weaken the economies of the two countries.
Institutions: limited impact, but American operators cannot avoid
In May this year, the US government further increased trade controls on China, requiring semiconductor manufacturers using US equipment to obtain special licenses to sell products to companies on the US entity list - the first major goal is China's telecom equipment manufacturer Huawei (Huawei).
"The new regulatory measures are specifically targeting Huawei and its related companies, and attempting to implement the requirements of using semiconductor design and equipment directly produced by design software tools and manufacturing equipment from the United States to implement the requirements that it requires a license to ship to Huawei and its related companies;" a spokesperson for the International Semiconductor Industry Association (SEMI) said that the objects required to comply with relevant regulatory measures and obtain licenses do not include software suppliers or manufacturing equipment operators in the United States.
However, the US equipment industry is still affected by relevant regulatory measures, because American operators have been banned from selling sensitive technologies to relevant Chinese entities, and the new regulations have expanded the scope of "military end-uses". In short, the U.S. export ban may curb sales of semiconductor manufacturing equipment to Chinese chip operators.
SEMI pointed out: "Because the export ban requires products directly produced with US equipment to obtain a special license before they can be shipped, but the use of other products produced from equipment from major US trading partners is not allowed, which makes the export ban likely to have a suppressive effect on the procurement of US equipment."
The equipment manufacturers I contacted for this report initially stated that they would measure the new US measures, but then most were unwilling to express further opinions or no longer responded; some operators' reasons were the silent period before the financial report was released, but most of them believed that this topic was too sensitive. After all, the US's intention was to prevent China from obtaining advanced technologies that could strengthen its semiconductor industry. What are the specific impacts of
? Risto Puhakka, president of VLSI Research, a semiconductor industry research organization, said that equipment operators seem to have safely survived the trade war storm; "Although the new coronavirus has ravaged and caused trouble for the supply chain, the industry performed roughly well." It is not easy to apply for a license for export from , but there are ways to avoid it. He pointed out that the procedures for applying for export license from the US government are very cumbersome, but so far there is no application to be rejected; "At this stage, the US government is still collecting information, and equipment manufacturers say they are adjusting themselves to adapt to the new regulations, but the overall feeling is: this is a hassle."
SEMI said that the punishment for intentional violation of US export regulations will be very serious. The law enforcement unit is the Bureau of Industry and Security under the US Department of Commerce (Bureau of the Ministry of Commerce) Industry and Security).
VLSI expects that the global semiconductor equipment market's revenue in 2020 will reach US$82.7 billion, a growth of 7.3% over the previous year; but if the global market is severely impacted by the new coronavirus epidemic in the second half of the year, the market's revenue is estimated to be US$71.2 billion, a decline of 7.6% over the previous year (refer to the figure below). SEMI's global semiconductor manufacturing equipment sales forecast for 2020 is to grow by 6% to US$63.2 billion, and in 2021 it is forecast to reach a record $70 billion.
industry experts unanimously believe that the US has introduced a new export control ban to hinder the progress of China's IC technology. Although the ban is specifically aimed at Huawei, the relevant terms of military end-use may affect Chinese chip manufacturers that have business with Huawei or wafer foundries such as SMIC and TSMC.
Puhakka said that the US export control regulations related to semiconductor equipment sales are complex. "The new control measures have three main goals. First, the US government must obtain more information on the sales process of equipment operators and manufacturers. Secondly, it is to prevent China from obtaining advanced equipment. The third is to restrict Huawei from obtaining advanced semiconductor technology ."
However, for example, if TSMC manufactures wafer directly shipped to Huawei, the export ban is of course applicable; but if the wafer is shipped to other places first for packaging, it will be a "workaround". Can the
ban curb China's scientific and technological development? There is no fixed number
Volkswagen generally believes that it will be difficult for China to improve chip technology without using American equipment; Puhakka does not rule out this possibility, but also points out: "Most wafer equipment comes from European or Japanese suppliers, and there are few suppliers for process control equipment, and American businessmen KLA is the leader." In other words, there is still no fixed number.
IP brings another scene of small-scale conflict to this Sino-US technology cold war, adding complexity to the authorization agreement. Puhakka said: "There are many sources of IP. You may have used Arm core and memory IP when developing products, as well as an entire IP library compiled by TSMC and other manufacturers; but in the US's considerations, IP is defined as a key technology that may fall into the hands of any entity."
Public opinion generally agrees with the US government's curbing China's progress in semiconductor technology. The main reason is that China exclusively occupied markets such as solar photovoltaic panels and LCD panels through price wars, resulting in many overseas competitors being forced to return. Industry experts believe that the Chinese government's subsidy policy has caused those markets to be "destroyed".
But Puhakka also said that from an investment perspective, without government subsidies, the only other way for Chinese operators to obtain funds is through activities like SMIC's IPO.
quits business in China due to ban? The ultimate goal of the US government is of course to bring semiconductor manufacturing back to the United States. Recently, many revitalization bills have been promoted one after another, hoping to attract semiconductor industry investors to invest in the local area; however, equipment industry players remain silent on this issue. Puhakka believes: "This is because they have Chinese customers, Korean customers, Japanese customers, and European customers. They are used to 80% of their revenue coming from markets outside the United States; they will not pick the market and don't care where the demand comes from. As long as there are customers, they usually don't care where the terminal market is."
He pointed out that generally speaking, the decisions of IC operators will not favor the United States, but will look at their own product lineup and how they will expand their business; "This strategy will not change overnight, and the United States has long been at a disadvantage in the competition to provide incentives. Although the United States may have some trade advantages for TSMC, the company will also look at the South Korean market, Taiwan market and mainland China market, and its operating bases will not be in a single country.
"Businessmen have no borders, they will decide which one is best for their investment;" Puhakka concluded: "This has little to do with whether the government provides funds, but is related to their own correct choice."
original text was published on ESM sister website EE Times Editor: Elaine Lin
(reference original text: For Now, Chip Gear Immune to U.S. Export Controls, By Barbara Jorgensen Translated by Judith Cheng)
Puhakka believes: "This is because they have Chinese customers, Korean customers, Japanese customers, and European customers. They are used to 80% of their revenue coming from markets outside the United States; they will not pick the market and don't care where the demand comes from. As long as there are customers, they usually don't care where the terminal market is."
He pointed out that generally speaking, the decisions of IC operators will not favor the United States, but will look at their own product lineup and how they will expand their business; "This strategy will not change overnight, and the United States has long been at a disadvantage in the competition to provide incentives. Although the United States may have some trade advantages for TSMC, the company will also look at the South Korean market, Taiwan market and mainland China market, and its operating bases will not be in a single country.
"Businessmen have no borders, they will decide which one is best for their investment;" Puhakka concluded: "This has little to do with whether the government provides funds, but is related to their own correct choice."
original text was published on ESM sister website EE Times Editor: Elaine Lin
(reference original text: For Now, Chip Gear Immune to U.S. Export Controls, By Barbara Jorgensen Translated by Judith Cheng)
