Chinese chipmakers want to protect themselves from US sanctions. SMIC and Yangtze Memory Technologies are seeking to replace U.S. equipment with domestic ones. However, it is not so easy to do so, Chinese analysts note.
Leading Chinese chip maker Semiconductor Manufacturing International Corporation (SMIC) attracted a record $ 7.8 billion investment for its product development. Huawei, following the imposition of US sanctions, began buying a significant portion of SMIC chips. According to the Chinese manufacturer, Huawei accounts for up to 20% of all orders from the company.
The problem is that SMIC, like other chip manufacturers in the world, depends on American technology. For example, the software required for chip design is all from the US: Cadence Design Systems, Synopsys, Ansys. The companies that supply the necessary equipment for the manufacture of the chips are also U.S.: Applied Materials, KLA, ASML.
U.S. authorities recently announced the possibility of blacklisting SMIC, as well as Huawei. According to the US, SMIC allegedly cooperates with the Chinese military-industrial complex.
Not surprisingly, Chinese chipmakers are trying to reduce their dependence on other states. Furthermore, the Chinese authorities have repeatedly stressed the need to develop their own fundamental technologies. China is aiming to satisfy its own chip and semiconductor needs by 70% by 2025 and to fully replace imports in this area by 2030.
However, Chinese experts believe that this task is too ambitious. Xu Canhao, a professor at Suzhou University Institute of Computational Electronics Science and Technology, thinks that it is almost impossible to establish a production base for the next-generation chips in such a short time.
“If it’s 40nm technology or even an older one, Chinese companies can do it. If we talk about 5nm, it is almost impossible to get rid of dependence on American technology. China has always been relatively behind in semiconductor technology. It is a process that involves many links in the production chain,” the Chinese analyst told Revyuh.
Currently, to produce chips of at least 28 nm, SMIC can provide only 20% of the necessary equipment and technology, while the rest has to be imported from the United States, Japan, South Korea or the European Union. But even non-US equipment continues to use US technology, in one form or another. So China needs to develop its own industrial base from scratch. But it is a very long process, the expert observed.
“It is a very extensive production chain, and there is no single company that can produce world-class products on its own. For us, the main problem is that we do not have advanced semiconductor technology,” he explained.
The analyst recalled that the country had created a special fund to stimulate the semiconductor industry and companies that work in this area also have tax incentives.
“But it will take us many years to reach the advanced international level. In reality, the US, the EU and Japan have taken 40-50 years to develop these technologies. In two or three years we simply will not be able to reach such a high level,” explained Xu Canhao.
China expects to spend $1.4 trillion for this purpose by 2025. Several decades ago, China only manufactured cheap consumer goods and has now moved on to manufacturing cars, telecommunications equipment, and computers. And they are already a real competition for products from Japanese, European and American manufacturers.
It is difficult to estimate how long it will take China to create its own semiconductor technologies. The Chinese authorities have exempted companies in the semiconductor industry from income tax for 10 years. Apparently, this is expected to be how long it will take them to become competitive players in the world market.