On October 7, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) released a new set of draft semiconductor export restrictions, including nine new rules, aimed at transactions involving advanced chips, high-performance computing systems, and the list of entities involved. Export controls are imposed on transactions with certain entities on the website. In addition, the new rules have also added restrictions on some high-end semiconductor equipment transactions.
The rules will have a greater impact on the 28 Chinese enterprises and institutions on the Entity List, most of which are supercomputer institutions and artificial intelligence companies. The U.S. BIS also added 31 Chinese entities to its “unverified list”, including leading Chinese memory chip companies. Companies that export or transship products listed in the “Commercial Control List” to China must obtain permission from the United States.
The purpose of this new measure by the United States is to cut off China’s access to high-end chips, and at the same time, further limit China’s ability to manufacture advanced process chips.
Since July, within three months, the U.S. government has made continuous moves to restrict the export of high-end semiconductor equipment, EDA tools and chips to China: In early July, the U.S. government negotiated with ASML in the Netherlands, hoping that the latter would ban sales to China Deep ultraviolet (DUV) lithography machine (which can be used to manufacture 7nm process chips), the United States also put pressure on Japan to stop selling lithography equipment to China; at the end of July, the United States further restricted China’s access to semiconductor equipment, from the previous 10nm manufacturing The equipment restrictions for process chips were extended to 14nm; in early August, Reuters reported that the United States was considering restricting the development of leading Chinese memory chip companies by prohibiting the export of equipment that manufactures more than 128 layers of NAND Flash, 18nm and more advanced process DRAM; in mid-August, The United States announced that companies in the country are not allowed to provide mainland China with EDA tools for designing and manufacturing 3nm or more advanced process chips; at the end of August, Nvidia submitted documents to the US Securities and Exchange Commission that the United States will soon issue a ban on exporting high-tech chips to China. Ban on performance GPU chips.
The above bans have now come true. The United States has escalated its suppression of the development of China’s semiconductor industry. At the same time, as the world’s largest comprehensive consumer market for integrated circuits and semiconductor equipment, China’s related supply chains are increasingly restricted. , It will inevitably have an impact on the global semiconductor supply chain, and the more such restrictions in the United States, the deeper the negative impact on the global semiconductor industry.
Impact on Mainland China
The United States restricts the development of the semiconductor industry in mainland China more and more, and the restrictions are more and more inclined to the upstream of the industrial chain, that is, semiconductor equipment and EDA tools, and the number of restricted enterprises and institutions is also increasing. In 2019, the main target of the United States is Huawei. At first, it only prohibited relevant American companies from selling high-end chips to Huawei, and then upgraded to restrict relevant foundries from manufacturing chips for Huawei. In the years after 2019, the United States will release a new “List of Chinese Enterprises and Institutions” every year, prohibiting relevant American companies from selling semiconductor-related products to these units on the list, and the restricted products have also expanded from chips to semiconductor equipment, EDA tools, and high-end products. The purpose of performance computing equipment and systems is to comprehensively curb the development of China’s semiconductor and high-performance computing industries from the application, design and manufacturing of high-end chips.
This time, in addition to semiconductor equipment and EDA tools, the United States has particularly emphasized restrictions on memory chip manufacturing in mainland China, mainly reflected in the prohibition of exporting to mainland China the equipment for manufacturing more than 128-layer NAND Flash, 18nm and more advanced process DRAM. This kind of restriction did not exist before. Therefore, it can also be said that the restriction on the manufacture of high-end memory chips marks a new stage for the United States to suppress the development of semiconductors in mainland China, because the integrated circuit industry has two “bulk commodities”. The processor is represented by the CPU, and the second is the memory.
The core technology and manufacturers of processors are concentrated in the United States, including Intel, AMD, Nvidia, Qualcomm, Broadcom, etc. These are the top ten chip companies in the world. Although except for Intel, the chip manufacturing of several other companies relies on TSMC. However, most of the semiconductor equipment and EDA tools necessary for TSMC to manufacture chips rely on American companies. Therefore, in general, the United States controls the “commodity” industrial chain of processors represented by CPUs. However, the overall level of processor design and manufacturing in mainland China is very weak. In the foreseeable future, there will be some achievements in some parts, but it is difficult to break through in general, and it will take a long time for development.
But memory is different. The market size of this “bulk commodity” is very large. Although the market is dominated by American and Korean companies, in recent years, there have been several leading DRAM and NAND Flash chip companies in mainland China that have been endorsed by the state. In terms of DRAM, DDR4 has achieved mass production. In terms of NAND Flash, 3D stacking technology has continued to improve. It has achieved mass production of 128-layer products and entered Apple’s supply chain. With the development of this momentum, the big memory market will be shared by mainland Chinese companies, which is obviously not what the United States wants to see. It is precisely because of this that the United States has proposed new restrictive measures specifically aimed at the manufacture of memory in China this time, hoping to fundamentally suppress the progress of memory in mainland China by “drawing from the bottom”.
Overall, in recent years, despite the unfavorable international environment, the development of China’s leading domestic memory chip companies is still good, with steady progress in technology, continuous expansion of mass production scale, and products gradually being recognized and approved by major manufacturers. application. Under such circumstances, the United States has imposed a ban on high-end semiconductor equipment, which will be a great test for the development of leading domestic memory companies in China. After all, it is difficult for a clever woman to cook without rice. Even if high-level DRAM and NAND Flash chips can be designed, If there is no corresponding level of manufacturing equipment, it is also a castle in the air.
At the same time, the limitations of high-end semiconductor equipment and EDA tools are also a test for manufacturers related to China’s local supply chain, and of course it is also a rare opportunity. Unable to buy foreign high-end chips, we can only design and produce them ourselves. At present, the purchase of high-end equipment and tools for the production of related chips is also restricted. There is only one way left, and that is to develop local semiconductor equipment and tools. Relatively speaking, it is easier to solve the problem of EDA tools, while semiconductor equipment is an asset-heavy product with real funds and highly technology-intensive technology, so it is not too sloppy.
Whether it is the manufacture of 18nm process DRAM, 128-layer NAND Flash memory chips, or logic chips for the manufacture of 14nm process, related high-end semiconductor equipment, especially from American manufacturers, has been difficult to obtain, and, in the next few years, from Similar equipment in Japan, South Korea, and Europe is likely to become increasingly difficult to purchase. If you want to manufacture high-end chips, you must rely on local equipment. At this time, what is needed is the firm determination to develop oneself, the confidence of self-reliance and self-improvement, and the perseverance of patience. At the same time, the components required for semiconductor equipment also need to keep up with the pace of development. It is necessary to change the situation that local fabs are highly dependent on American semiconductor equipment, while local semiconductor equipment factories are highly dependent on components from the United States, Japan and Europe. At this time, scientific development is more important, and there should be no such kind of head-scratching projects. Decision makers, investors and professionals have their own concerns and inconsistent goals. As a result, projects that should be launched are not launched, and projects that should not be launched are repeated. In the end, there was an unfinished situation, and the previous capital and manpower investment were in vain. Losing some money is still a trivial matter. The main problem is that it was wrong at the beginning, thus wasting the most precious resource – time. In the current and future period, the most precious thing in China’s semiconductor industry is time, and it can no longer afford to waste it.
Impact on Global Markets
Since mainland China is the core market for the consumption of semiconductor-related products in the world, especially integrated circuits and semiconductor equipment (the import volume of integrated circuits ranks first in the world, and the import of semiconductor equipment ranks the top two in the world), the tightening restrictions in the United States will definitely have a negative impact on International high-end chips, semiconductor equipment and wafer foundries have a growing influence.
Relatively speaking, the major semiconductor equipment manufacturers in the United States and Japan are less affected. After all, the United States and Europe are building fabs, which can consume a lot of equipment orders. IDM companies such as Samsung and SK Hynix, which have a large amount of advanced process chip production capacity in mainland China, have a high probability of obtaining a license from the United States to purchase related semiconductor equipment for their production in mainland China fabs. However, high-performance computing chips and wafer foundries are relatively affected, especially in the expected global economic downturn in the next few years, the related orders may be greatly reduced.
According to analysis by industry insiders, the new U.S. ban directly names TSMC, Samsung and other wafer foundries, requiring them not to assist mainland companies in the production of advanced process high-performance computing and AI chips. TSMC is the world’s largest advanced process chip foundry. In addition, the proportion of Samsung’s high-performance computing and AI chip customers from mainland China is higher than that of TSMC. Industry insiders believe that if Samsung will follow up to make up for the gap in wafer foundry orders and win more American customers, it will be more active in launching a price war. TrendForce believes that if American high-performance computing chip manufacturers cannot export to mainland China in the future or mainland companies cannot put into production, it will have a negative impact on future advanced process orders, and the supply and demand of high-performance computing chips will face a test in 2023.
This time, the US ban mainly involves advanced process chips and equipment, and the mature process industry chain is less affected. However, the determination of the United States to suppress the development of China’s semiconductor industry is becoming more and more firm. The regulations introduced this time are definitely not the final version. American semiconductor practitioners work in related companies in mainland China. In this case, the mature process-related chains cannot be blindly optimistic, and must be prepared for the worst. This has also created more opportunities for manufacturers in various links of the local mature process chip industry chain, especially equipment and wafer manufacturers. Compared with advanced processes, it is much less difficult for mature process industries to further improve their technical level and market share. The key It is necessary to abandon the fluke mentality in order to calmly deal with future challenges.
In the foreseeable future, relevant enterprises and institutions in China must be prepared for hard times. For example, manufacturers who develop and sell high-performance computing systems cannot purchase high-end CPU, GPU and other chips from American manufacturers. Unable to meet the requirements, so how to manufacture high-performance computing equipment required by various industries? is a difficult problem.
In addition, the advanced chips of IC design companies, especially those with a process below 10nm, cannot obtain the production capacity of wafer foundries, and they cannot be manufactured after they are designed. This will be a more difficult problem.