China may have to reassess chip strategy in face of US sanctions
(2023/01/04)
- Reference: 1672854314
- News link: https://www.theregister.co.uk/2023/01/04/china_chip_strategy/
- Source link:
China may be rethinking its approach to the ongoing semiconductor wars with the US and looking to other ways to boost its chipmaking industry than simply trying to match Washington's costly investments and subsidies.
According to reports, Beijing is seeking alternative strategies to the massive investment that would be required to advance China's semiconductor industry to the level where it could compete with that of the US. This comes as the country faces further impact to its economy following the [1]lifting of its zero-COVID lockdown strategy .
China was previously aiming to [2]step up investments at home in order to combat the US restrictions on advanced chip technology introduced last year, while also taking its case to the [3]World Trade Organization , claiming the US measures threaten global supply chains.
[4]
Beijing officials are now said to be considering how to move beyond costly subsidies to semiconductor companies as these may have proven to be counterproductive, according to Bloomberg, which cites anonymous sources familiar with the matter, as they are likely one of the causes behind the current US technology restrictions.
[5]
[6]
One such move could be to find ways of lowering the cost of semiconductor materials used by chipmakers, it has been suggested. However, without access to Western technologies, China may have to forego plans to produce high-tech chips using the most advanced semiconductor nodes.
"Leading-edge chip fabrication is incredibly difficult," said Andrew Buss, IDC Research Director for European Enterprise Infrastructure. "Even before the latest restrictions, China was struggling to build a competitive semiconductor industry."
[7]
Buss pointed to Intel's well-publicized [8]issues with its 10nm process as one example of how even established technology companies can struggle with cutting-edge silicon production.
"Where China is today is that if it wants a cutting-edge semiconductor industry, it needs help from Western companies, but now there are export restrictions on such technology," Buss said.
[9]HPE to offload remaining stake in Chinese joint venture H3C
[10]South Korea to offer tax breaks to hedge semiconductor woes
[11]Nexperia calls in the lawyers to save Welsh chip fab deal
[12]TSMC ramps up 3nm chip baking at Taiwan plants
This is particularly so when it comes to photolithography equipment such as that made by Netherlands-based outfit ASML, which is currently the only provider of Extreme Ultraviolet (EUV) machines used in the production of 5nm and 3nm silicon.
Without access to this, China's semiconductor industry is having to focus on chips made using more mature process nodes, such as those above 14nm, which are still more than adequate for a broad range of applications, including the automotive sector, according to Buss.
"I think we will see China looking more internally, with manufacturers such as [13]SMIC serving the domestic market instead of being a foundry for Western companies," Buss said.
[14]
Richard Gordon, practice vice president for semiconductors and electronics at Gartner, agreed on this point, saying that he also sees China using its semiconductor industry to service its own internal consumption more in future.
However, Gordon said that he doesn't believe Beijing will give up on its aspirations for the ability to produce advanced semiconductors, just that it may take longer than previously expected.
"I don't think they will stop throwing money at the problem, but the bigger issue is that it requires expertise and time, and it will take a very long time," he said.
In the meantime, China may well develop its capabilities in existing technologies, such as analog or mixed CMOS, but this will be part of a dual strategy, according to Gordon.
"I expect they will aim to compete in the legacy sector, while investing in developing new technology over the long term," he said. Without access to ASML and its advanced lithographic technology, this may take at least 10-15 years, but China will still try, he added.
The chilling effect of US sanctions is already leading to an undoing of the distributed global supply chain infrastructure that has built over the past few decades, Gordon said, which may lead to a world divided into China-centric and US-Europe-centric networks of supply chains and a greater self-reliance within individual theaters.
"If China becomes a dominant player in legacy semiconductors, would you have them as a second source if the supply could be cut off without warning?" ®
Get our [15]Tech Resources
[1] https://www.theregister.com/2022/12/19/china_supply_chain_living_with_covid/
[2] https://www.theregister.com/2022/11/28/beijing_ramping_up_semiconductors/
[3] https://www.theregister.com/2022/12/13/china_files_complaint_with_wto/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y7YFD3MB7YzRtCEeHoWWlwAAAJE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[8] https://www.theregister.com/2018/12/12/intel_architecture_future/
[9] https://www.theregister.com/2023/01/03/hpe_to_sell_remaining_share/
[10] https://www.theregister.com/2023/01/03/korea_chip_tax_breaks/
[11] https://www.theregister.com/2022/12/30/newport_nexperia_china/
[12] https://www.theregister.com/2022/12/29/tsmc_3nm_production_taiwan/
[13] https://www.theregister.com/2022/02/14/smic_q4_2021/
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y7YFD3MB7YzRtCEeHoWWlwAAAJE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://whitepapers.theregister.com/
According to reports, Beijing is seeking alternative strategies to the massive investment that would be required to advance China's semiconductor industry to the level where it could compete with that of the US. This comes as the country faces further impact to its economy following the [1]lifting of its zero-COVID lockdown strategy .
China was previously aiming to [2]step up investments at home in order to combat the US restrictions on advanced chip technology introduced last year, while also taking its case to the [3]World Trade Organization , claiming the US measures threaten global supply chains.
[4]
Beijing officials are now said to be considering how to move beyond costly subsidies to semiconductor companies as these may have proven to be counterproductive, according to Bloomberg, which cites anonymous sources familiar with the matter, as they are likely one of the causes behind the current US technology restrictions.
[5]
[6]
One such move could be to find ways of lowering the cost of semiconductor materials used by chipmakers, it has been suggested. However, without access to Western technologies, China may have to forego plans to produce high-tech chips using the most advanced semiconductor nodes.
"Leading-edge chip fabrication is incredibly difficult," said Andrew Buss, IDC Research Director for European Enterprise Infrastructure. "Even before the latest restrictions, China was struggling to build a competitive semiconductor industry."
[7]
Buss pointed to Intel's well-publicized [8]issues with its 10nm process as one example of how even established technology companies can struggle with cutting-edge silicon production.
"Where China is today is that if it wants a cutting-edge semiconductor industry, it needs help from Western companies, but now there are export restrictions on such technology," Buss said.
[9]HPE to offload remaining stake in Chinese joint venture H3C
[10]South Korea to offer tax breaks to hedge semiconductor woes
[11]Nexperia calls in the lawyers to save Welsh chip fab deal
[12]TSMC ramps up 3nm chip baking at Taiwan plants
This is particularly so when it comes to photolithography equipment such as that made by Netherlands-based outfit ASML, which is currently the only provider of Extreme Ultraviolet (EUV) machines used in the production of 5nm and 3nm silicon.
Without access to this, China's semiconductor industry is having to focus on chips made using more mature process nodes, such as those above 14nm, which are still more than adequate for a broad range of applications, including the automotive sector, according to Buss.
"I think we will see China looking more internally, with manufacturers such as [13]SMIC serving the domestic market instead of being a foundry for Western companies," Buss said.
[14]
Richard Gordon, practice vice president for semiconductors and electronics at Gartner, agreed on this point, saying that he also sees China using its semiconductor industry to service its own internal consumption more in future.
However, Gordon said that he doesn't believe Beijing will give up on its aspirations for the ability to produce advanced semiconductors, just that it may take longer than previously expected.
"I don't think they will stop throwing money at the problem, but the bigger issue is that it requires expertise and time, and it will take a very long time," he said.
In the meantime, China may well develop its capabilities in existing technologies, such as analog or mixed CMOS, but this will be part of a dual strategy, according to Gordon.
"I expect they will aim to compete in the legacy sector, while investing in developing new technology over the long term," he said. Without access to ASML and its advanced lithographic technology, this may take at least 10-15 years, but China will still try, he added.
The chilling effect of US sanctions is already leading to an undoing of the distributed global supply chain infrastructure that has built over the past few decades, Gordon said, which may lead to a world divided into China-centric and US-Europe-centric networks of supply chains and a greater self-reliance within individual theaters.
"If China becomes a dominant player in legacy semiconductors, would you have them as a second source if the supply could be cut off without warning?" ®
Get our [15]Tech Resources
[1] https://www.theregister.com/2022/12/19/china_supply_chain_living_with_covid/
[2] https://www.theregister.com/2022/11/28/beijing_ramping_up_semiconductors/
[3] https://www.theregister.com/2022/12/13/china_files_complaint_with_wto/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y7YFD3MB7YzRtCEeHoWWlwAAAJE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y7YFD3MB7YzRtCEeHoWWlwAAAJE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2018/12/12/intel_architecture_future/
[9] https://www.theregister.com/2023/01/03/hpe_to_sell_remaining_share/
[10] https://www.theregister.com/2023/01/03/korea_chip_tax_breaks/
[11] https://www.theregister.com/2022/12/30/newport_nexperia_china/
[12] https://www.theregister.com/2022/12/29/tsmc_3nm_production_taiwan/
[13] https://www.theregister.com/2022/02/14/smic_q4_2021/
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y7YFD3MB7YzRtCEeHoWWlwAAAJE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://whitepapers.theregister.com/
Re: US semiconductor industry???
tooltalk
ASML doesn't make all parts in-house. As you noticed with their depends on Zeiss glasses, which is now part of ASML, the company depends on pver 600 suppliers, of which slightly less than 25% are Americans. ASML's 2nd largest R&D center is in CT; laser/light-source R&D in San Diego, CA (via its American subsidiary Cymer), and software R&D in Silicon Valley, CA, so America's footprint in ASML's DUV/EUV dominance isn't small.
The days of one company or one country managing all layers of chip-making supply-chain is over. Taiwan and South Korea just manufacture chips; but really have no chip equipement supply-chain of their own and up to 90% of them are imported from either Japan and the US (and the Netherland). Once top-American chip makers such as AMD, IBM have given up on chip manuafcturing to focus on designing and research and, bar Intel and Micron, there is nobody else making chips inhouse. China handles mostly labor-intensive assembly/packaging/testing part of the supply-chain, but they are still too young and inexperienced -- most of China's chip initiatives are in fact spearheaded by Tawanese-expat -- ie, ex-TSMC/UMC engineers hoping to strike gold in China.
I spy with my little eye
RobThBay
Beijing is seeking alternative strategies...
Ah yes, good old fashioned industrial espionage.
Espionage Doesn't Always Give Useful Results
An_Old_Dog
... even when the desired info has been exfiltrated. Increasing levels of technology has increased the levels of technology required to build the initially-desired technology, as illustrated by the EUV+ASML+ASML-dependencies comments above.
US semiconductor industry???
It's true that the problem are US sanctions...
But these sanctions force non-US companies from selling their tech to China.
As the article already mentions: To build EUVL. fabs, you need the machines from ASML (Netherlands) and ASML needs the mirrors from ZEISS SMT (Germany).
As far as I know the only semiconductor manufacturing companies producing chips in the sub 10nm nodes are Samsung (Korea) and TSMC (Taiwan).
So these sanctions regulate non-US companies.
What exactly is meant with the "US semiconductor industry" in this instance? Intel (LOL)?
China for sure has enough know-how to design chips (see Huawei before it was killed by Trump); what the Chinese are lacking are semiconductor manufacturers for the very small nodes; but that's also true for the US itself and Europe...