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Chinese Chip Manufacturers Want to Abandon American Technologies

Chinese Chip Manufacturers Want to Abandon American Technologies
folder_openAsia-Pacific... access_timeone month ago
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By Staff, Agencies

Chinese chip makers want to insure themselves against US sanctions. Semiconductor manufacturing international corporation [SMIC] and Yangtze Memory Technologies are considering replacing American equipment with domestic alternatives, after the US said it didn’t rule out sanctions against SMIC, similar to those imposed against Huawei.

SMIC is a leading Chinese chip manufacturer that recently raised a record $7.8 billion worth of investment in production development.

But SMIC products are still lagging behind today’s most advanced chips in terms of manufacturability: SMIC produces 14nm chips, while leading manufacturers TSMC and Samsung produce smaller 5nm chips.

That said, even at 14nm, many Chinese electronics manufacturers use SMIC products. And this number looks set to rise due to US sanctions on Huawei, leading the company to buy a significant proportion of its chips from SMIC, up to 20 percent of the company’s orders, according to the chip maker.

The problem is that even in the 14nm manufacturing process, SMIC, as well as other chip manufacturers throughout the world, depends on American technology. For example, all the software needed to design chips is American: Cadence Design Systems, Synopsys, Ansys. The companies supplying the equipment necessary for chip production are also American: Applied Materials, KLA, ASML.

This makes SMIC sensitive to the secondary US sanctions imposed on Huawei, banning US companies from supplying chips to the Chinese telecom company if their production uses any American technology.

Moreover, the US authorities have recently announced the possibility of blacklisting SMIC and imposing similar sanctions against it, motivated by the fact that SMIC allegedly cooperates with the Chinese military-industrial complex. This is damaging for SMIC's share price, and as reports of possible sanctions became public, the company’s capitalization fell by around 20 percent.

Given all of this, Chinese chip manufacturers are trying to reduce their dependence on imports. Chinese authorities have repeatedly spoken about the need to develop their own fundamental technologies and China has set a target to meet 70 percent of its needs for chips and semiconductors by 2025, and to achieve complete import substitution by 2030.

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