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The chip self-made effort of China has just been hit a painful blow

The chip self-made effort of China has just been hit a painful blow

. 4 min read

Japan’s top semiconductor equipment supplier announced to comply with the US embargo. They will stop supplying to Chinese customers named in the blacklist. This announcement hit a painful blow to the chip self-made effort of China.

From over the years, China has been trying to build its own semiconductor industry. Essentially, they towards reducing its dependence on suppliers from the US, Europe and Japan for chip making machines. But, their effort has just been flushed a dipper of cold water.

The rejection from market-dominating suppliers

Firstly, the Tokyo Electron firm of Japan, the world’s third-largest supplier of semiconductor producing equipment, has just acted some action. They announced about not providing Chinese customers named in the US government’s blacklist.

We will not co-operate with Chinese customers, whose companies that Applied Materials and Lam Research have been prohibited cooperation.

A senior executive director of Tokyo Electron said.

Therein, Applied Materials and Lam Research are the US’s top chip manufacturing equipment suppliers. Therefore, it is easy to understand why they will not have business cooperation with companies listed in the US government’s blacklist.

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The Tokyo Electron firm of Japan said they will not provide Chinese customers listed in the US government’s blacklist, threaten to the chip self-made ambition of China

For us, it is important that the US government and the industry see that we are an upright company.

This director added.

This seems to refer a long runs relationship between Tokyo Electron and the United States from 1960. Tokyo Electron was the original importers of American equipment.

According to Reuters news, another big Japanese chip manufacturing equipment supplier is also considering stopping ex-factory for China firms named in the blacklist.

This issue is beyond our decision ability.

Reuters’s unnamed source said.

We do not receive any specific notices from the Minister. We know that we may be in big trouble if we take advantage of the US export embargo to expand business with China.

Many executives of other equipment suppliers said they were being in close contact with the Japanese Ministry of Industry.
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Inside factory of Tokyo Electron, Miyagi province.

Do not take advantage of US government export embargo

Tokyo Electron did not mention specific Chinese customers. Currently, chip makers are backed by Beijing, Fujian Jinhua Integrated Circuit is a company listed in the Entity List. They have also been banned in buying products technology from the US.

In addition, a small number of Chinese companies and research organizations are also in the “red list” and US companies are recommended to avoid cooperation.

Meanwhile, HiSilicon, Huawei’s chip design department did not produce the chip by themselves. This helps them not encounter risks. However, suppliers do not come from the US still comply this embargo can cause Huawei other huge risks.

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Fujian Jinhua Integrated Circuit, the company that the US accuses of stealing trade secrets from Micron chip company.

US law shows that any products containing ≥25% US technology will be the target of an export restriction order from the US government. However, executives of Japanese equipment suppliers do not give a reason for stopping supplying to Chinese companies.

Japanese companies such as Tokyo Electron cannot replace American competitors and complete production lines for China. But in fact, it is very difficult to consider the angry reactions from the US.

A chip manufacturer director in the US said.

The lag of Chinese chip manufacturing technology

Japan has up to 5 companies in the top 10 of chip manufacturing equipment suppliers in the world. In fact, the specialized chip manufacturing equipment industry is a field with very small participants. These devices act as an important strategic role for all semiconductor manufacturers.

Chip manufacturing involves a lot of different processes. This industry also requires a lot of specialized equipment. Each of these segments usually has only a few vendors and they also the one dominate the whole market.

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The chip self-made ambition of China is facing many difficulties.

Currently, Tokyo Electron controls nearly 90% of the market provides microchip coatings and cleaners. This firm is also competing directly with US companies – Applied Materials and Lam Research in another field.

Beijing is strongly investing to enhance domestic chip equipment suppliers. In fact, they planned to achieve the goal – meeting 70% of semiconductor demand by 2025. According to industry sources assumed, the technology of these suppliers is still far behind the world. Basically, China is still dependent on imported equipment.

According to an American policy research organization, currently, only 16% of China’s semiconductor needs are produced domestically and half of which are produced by Chinese companies.