Regarding the restrictions imposed by the United States and other countries on China’s semiconductor industry, the recent statement by the China Semiconductor Industry Association has sparked heated public opinion. Among them, there is a view that has gained many people’s recognition: the world of the jungle does not need to rely on anyone’s mercy.
The United States is actively subsidizing its semiconductor enterprises in the name of “solving the problem of chip shortage”, but in essence, the United States aims to get rid of its dependence on Asia, especially Chinese Mainland and Taiwan, China. The cost of building a “wafer factory” in the United States is 40% to 70% higher than overseas. Subsidies are the only answer for the United States to reverse its 40-year decline in semiconductor production. American media say it is time to realize that the United States is no longer a “seller” that can afford high corporate taxes, strict regulation, and no investment incentives. The United States is now a desperate buyer. If it wants to build a wafer factory in the United States,
The chip bill that was eventually passed did not inspire the enthusiasm of American semiconductor companies at first. One reason is that the Chip Law prohibits companies from buying back shares through subsidies. “If a chip company receives $3 billion from the Ministry of Commerce to help offset wafer factory costs, it will require every penny to pay for the higher operating and capital expenditures it faces in the United States, leaving shareholders with nothing.” This effect forced the US government to “increase” other ways to develop its own semiconductors, so the US began to unite with other countries to restrict semiconductor exports to China.
This operational logic is not difficult to understand: developing one’s own industry is not as difficult as “dragging others down.”. The United States first established the Chip4 Alliance, and then joined forces with Japan and the Netherlands to restrict the export of semiconductor equipment to China in 2023. Although all countries seem to have complied with the requirements of the United States, who is the abacus for?
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The dilemma of “serving each other” in the Netherlands, Japan, and South Korea
“Maintenance of Multilateralism” for Lithographers Exported from the Netherlands is Restricted
The Dutch semiconductor manufacturing equipment manufacturer ASML has a 100% market share in the EUV (extreme ultraviolet) lithography field. In January 2023, ASML stated that its export control rules for China were being “finalized”. As of press release, officials have not provided any explanation or refutation of the alleged details of the agreement.
This has sparked discussions in China’s semiconductor industry. After all, if ASML lithography machines cannot be exported, it will be a great blow to China’s semiconductor manufacturing industry, especially China’s semiconductor industry in catching up with and surpassing advanced manufacturing processes. However, the subsequent operation by the Netherlands seems to indicate that there is still room for cooperation with China.
On February 18, Wang Yi, member of the Political Bureau of the CPC Central Committee and director of the Office of the Central Foreign Affairs Working Committee, met with the Deputy Prime Minister and Minister of Foreign Affairs of the Netherlands, Hukstra, while attending the Munich Security Conference. Hukstra said that the world is interdependent, and all parties have the responsibility to firmly uphold multilateralism and support multilateral mechanisms and international rules. I am glad to see that China has overcome the epidemic, the economy has recovered strongly, and foreign exchanges and cooperation have resumed rapidly. We look forward to close exchanges and expanded cooperation with China. The Netherlands is willing to continue to be a reliable and stable partner of China.
As for whether the Netherlands will choose to wholeheartedly “follow” the United States, Dutch experts said, “The Netherlands will not blindly follow the United States.”. In fact, Europeans do not want to see the United States isolate China. Taking the “Inflation Reduction Act” promulgated by the United States as an example, the United States government can provide high subsidies to local industries under the Act. American products will gain a competitive advantage, while other domestic products will not have a foothold due to the lack of a fair competitive environment. In fact, the EU recently announced potential countermeasures against the inflation reduction bill.
Japan should maintain cooperative relations with China
In addition to the Netherlands, Japan, which has many large manufacturers of semiconductor manufacturing equipment, has also been attracted by the United States. The Biden government of the United States strongly urged Japan to cooperate in strengthening control, so the report said that the Japanese government would start to control the export of cutting-edge semiconductors. Japan’s advantages mainly lie in the fields of semiconductor manufacturing equipment, wafer manufacturing and materials. According to the prediction of the American Semiconductor Industry Association, the global market share of semiconductor manufacturing equipment in Japan will reach 27% in 2021, and the market share of wafer manufacturing and materials will be about 16% and 14%. In the context of the US and China’s scramble for technological hegemony, with the return of the US manufacturing industry to China, the fear that the manufacturing equipment and materials industry will shift overseas is growing. Japanese media have noticed that most Japanese semiconductor enterprises have been negatively affected by Japan’s following the US restrictions on exports to China. The proportion of operating revenue of Tokyo Electronics from China may fall to 22%, down about 5 percentage points year on year.
China and Japan have a relationship in their economies, and Japan must balance the gap between the United States and China. In order not to over stimulate China, Japan will not name China in its regulatory measures. According to the analysis of Japanese industry insiders, this is because “it is difficult to deny that as long as a little handle is grasped, the situation of being prosecuted to the World Trade Organization or other industries will be affected.”. Currently, according to the Foreign Exchange Law, the export of some manufacturing equipment requires application for a license, which may be expanded in the future. It is expected that the content of Japan will be milder than that of the United States.
Japanese Prime Minister Takeo Noda called on China to establish “constructive and stable relations.”. “For Japan, the United States is the most important ally, but I believe that Japan cannot maintain consistency with American policies in some aspects. Japan cannot split China, its largest trading partner.”
South Korea Seeks US Amnesty to Sell China
According to a Korean media article, the sequelae of the US semiconductor restrictions on China are being transferred to the Korean equipment industry. It is difficult for core semiconductor equipment manufactured in the United States, Japan, the Netherlands, and other countries to enter China, so the export of supporting equipment from South Korea is also hindered.
In terms of equipment, Korean enterprises have provided China with more auxiliary process equipment systems than necessary process equipment, such as equipment for adding additional functions or thermal control to main equipment, measurement, inspection, and cleaning equipment. In addition, South Korea also sells many sealing and testing equipment for shipment to China. As problems arise in the operation of Chinese chip factories, the sales of Korean equipment companies will also be affected.
A South Korean semiconductor equipment company said, “Although it is expected that due to the restrictions of the United States, the vacancies in global equipment companies will be filled by South Korean companies, as the Chinese market itself shrinks, opportunities are being exploited.” The lost. ” If the sales volume of semiconductor equipment in South Korea decreases, this will also affect enterprises upstream of semiconductor manufacturing equipment, such as semiconductor materials, semiconductor equipment components, and other fields. Because Korean semiconductor equipment companies mainly purchase large quantities of raw materials and components in South Korea. The representative of the Korean semiconductor consumables company said, “The sequelae of the semiconductor restrictions in the United States began to emerge in the second half of last year. Small and medium-sized enterprises in South Korea are also inevitably affected.”China and Japan have a relationship in their economies, and Japan must balance the gap between the United States and China. In order not to over stimulate China, Japan will not name China in its regulatory measures. According to the analysis of Japanese industry insiders, this is because “it is difficult to deny that as long as a little handle is grasped, the situation of being prosecuted to the World Trade Organization or other industries will be affected.”. Currently, according to the Foreign Exchange Law, the export of some manufacturing equipment requires application for a license, which may be expanded in the future. It is expected that the content of Japan will be milder than that of the United States.
Japanese Prime Minister Takeo Noda called on China to establish “constructive and stable relations.”. “For Japan, the United States is the most important ally, but I believe that Japan cannot maintain consistency with American policies in some aspects. Japan cannot split China, its largest trading partner.”
South Korea Seeks US Amnesty to Sell China
According to a Korean media article, the sequelae of the US semiconductor restrictions on China are being transferred to the Korean equipment industry. It is difficult for core semiconductor equipment manufactured in the United States, Japan, the Netherlands, and other countries to enter China, so the export of supporting equipment from South Korea is also hindered.
In terms of equipment, Korean enterprises have provided China with more auxiliary process equipment systems than necessary process equipment, such as equipment for adding additional functions or thermal control to main equipment, measurement, inspection, and cleaning equipment. In addition, South Korea also sells many sealing and testing equipment for shipment to China. As problems arise in the operation of Chinese chip factories, the sales of Korean equipment companies will also be affected.
A South Korean semiconductor equipment company said, “Although it is expected that due to the restrictions of the United States, the vacancies in global equipment companies will be filled by South Korean companies, as the Chinese market itself shrinks, opportunities are being exploited.” The lost. ” If the sales volume of semiconductor equipment in South Korea decreases, this will also affect enterprises upstream of semiconductor manufacturing equipment, such as semiconductor materials, semiconductor equipment components, and other fields. Because Korean semiconductor equipment companies mainly purchase large quantities of raw materials and components in South Korea. The representative of the Korean semiconductor consumables company said, “The sequelae of the semiconductor restrictions in the United States began to emerge in the second half of last year. Small and medium-sized enterprises in South Korea are also inevitably affected.”
For Korean semiconductor enterprises, it is not only small and medium-sized companies that are nervous. Even semiconductor giants such as Samsung Electronics and SK Hynix cannot leave the Chinese market. In February, South Korean media said that executives of South Korean enterprises went to the United States, hoping to win the exemption from the Chip Act and continue to ship to China. The South Korean media also said that the South Korean government supported the emergency dispatch of senior executives from two major South Korean enterprises to the United States.
It is not difficult to see that even if the three countries agreed to some requirements of the United States, they could not draw a clear line with the Chinese market.
The semiconductor jungle has become “everywhere”
In fact, as countries increase their efforts to develop semiconductors, they are all experiencing semiconductor anxiety.
After Brexit, the UK needs to create a fair competitive environment with participants such as the United States, the European Union, and China, which is not a small pressure on British local enterprises. For months, British chip manufacturers have been calling on the British government to take action. British chip companies, including Pragmatic Semiconductor, IQE, and Paragraf, expressed disappointment at the UK government’s failure to propose plans to support the semiconductor industry in the region. If the UK government does not take action and releases a long awaited semiconductor strategy, UK chip manufacturers threaten to transfer their business to the US or Europe.
Some countries want to remain neutral and develop silently; There are also countries that want to hold the “thigh” of the United States.
The Indian Electronics and Semiconductor Association (IESA) and the American Semiconductor Association announced plans to establish a private sector working group to strengthen cooperation between the two countries in the global semiconductor ecosystem. The specific objectives of the working group include: to develop a “readiness assessment” on the semiconductor ecosystem in India; Gather industry, government and academic stakeholders to identify recent industry opportunities and promote the long-term strategic development of complementary semiconductor ecosystem; Put forward suggestions on opportunities and challenges to enhance India’s role in the global semiconductor value chain (including chip manufacturing); Identify and promote opportunities for labor development and exchange to benefit both countries.
John Neuffer, President and CEO of SIA, said, “We are pleased to launch this new plan with our peer IESA in India. India has been the main hub of semiconductor research, chip design and equipment engineering, but its future potential is greater. The working group will help determine practical ways to release this potential by strengthening the cooperation between the United States and India in the global chip ecosystem.”
On the surface, the United States gave India tickets, but a study published in the journal Sustainable Development in 2021 showed that most of the waste generated by the electronics industry in developed countries is accumulated in India. Their research cited data from the United Nations Environment Programme (UNEP), indicating that only 10% of the e-waste generated in the world today is recycled in developed countries, and the remaining 90% is sent to neighboring developing countries. The world. Indian media believe that in the end, India may just be a “garbage dump” used by developed countries to transfer electronic pollution.
In the jungle of the semiconductor industry, we need to find our own way.
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China Semiconductor Goes Out of the “Dark Forest”
“The Silicon Iron Curtain” is causing a crisis, with China being the most directly affected party. When the United States introduced the “Chip and Science Act” and used national power to suppress Chinese enterprises, free trade ceased to exist.
What about Chinese semiconductors? Developing basic science may be the fundamental way out of this situation.
Recently, an article in the journal of the Chinese Academy of Sciences pointed out that the lack of basic semiconductor research has led us into the “dark forest”. Even if a large amount of investment is made to replace domestic products, it can only achieve internal circulation or narrow the gap with the United States. The article suggests strengthening the construction of semiconductor basic capabilities, stabilizing a group of semiconductor basic research teams, conducting theoretical innovation at the source and bottom of semiconductor technology, and arranging patents and setting “checkpoints” in advance at the chip bottom that cannot be overcome. Bypass is an effective strategy to solve the “bottleneck” problem of key semiconductor core technology.
According to an article published by the Chinese Academy of Sciences, China’s investment in basic research and development of semiconductors has long been lower than 5% in the United States. This comparison reminds the Chinese semiconductor industry that it is time to surpass the gorgeous listed company figures and financing amounts and face the essential gap. To achieve a high level of technological independence, basic research must be strengthened. Strengthening basic research means improving the scientific research system and cultivating high-level basic research talents, which may be a new starting point.
The development of semiconductors is a long and difficult road. The darkness before dawn is the hardest to endure, but the days are always bright.
