SMIC (Semiconductor Manufacturing International Corp) es China’s largest semiconductor manufacturer. Its global market share is currently hovering around 5%, which is far from the 17% held by Intel and Samsung, and much further from the 54% held by Taiwanese giant TSMC. Even so, it is hot on the heels of the US GlobalFoundries, which has an approximate share of 7%. These figures clearly reflect its relevance in the integrated circuit market.
Despite everything, he has a formidable rival against him: the United States. The country led by the Joe Biden Administration placed the entire Chinese semiconductor industry in its sights on October 7, 2022, and did so with one purpose: to prevent this Asian country from being able to develop highly integrated chips similar to those currently produced by TSMC, Samsung or Intel. SMIC is its spearhead, which has placed this company at the forefront of the United States’ black list.
In practice, what the US government seeks is to prevent photolithographic equipment that has been developed using patents under its control fall into the hands of China. The two main suppliers of advanced lithography machines are ASML, which is from the Netherlands, and Tokyo Electron, which is a Japanese company, but both use American and other technologies. Without going any further, ASML’s extreme ultraviolet lithography machines use an American light source and optics of German origin.
SMIC has trouble equipping its new semiconductor factories
During the last quarter of 2022, the global demand for integrated circuits has decreased significantly, and 2023 has not started better for this industry. Even so, according to TSMC, the dark clouds will begin to dissipate during the second half of this year and little by little the demand for chips will grow again. The medium-term expectations of this industry are positive despite the fact that right now it is not going through a good moment, which has caused companies that are setting up new factories, such as TSMC or Intel, to reinforce their investments.
The US Administration seeks to curtail China’s production of highly integrated chips
SMIC is currently engaged in the construction of two factories: the one in Lingang, whose main building is ready, and the one in Xiqing, which has just started. In addition, one of its new Shenzhen plants started full-scale semiconductor manufacturing in December 2022, and the Jingcheng factory, which is also new, is ready to start production trials. However, will not be able to do it in the short term. The reason is that this last plant has not received all the lithography equipment it needs to function normally.
The foot of the United States is behind this trip. In fact, its sanctions are expressly intended to prevent the arrival of new photolithography machines at Chinese factories that produce chips of 14 nm or less, DRAM integrated circuits of 18 nm or less, or NAND flash chips with 128 layers or more. It is evident that, as we have anticipated a few lines above, the US Administration is seeking to curtail the production of highly integrated chips in China.
The only option for China given the current situation is none other than to become completely independent from the United States and its circle of influence in the field of chip manufacturing. The problem is that developing alternatives to US-patented technologies is not something that can be done quickly. Still, it is very likely that China has been at it for a long time. Be that as it may, we cannot ignore the fact that these sanctions are also indirectly penalizing US companies in whose client portfolio some Chinese companies occupy a prominent position. It is what globalization has.
Top Image: ASML | SMIC
More information: SMIC
